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Consumer confidence improved in July and was higher than expected, according to the latest data from the Conference Board.

The Conference Board’s Consumer Confidence Index rose to 97.2 in July, up from 95.2 in June and better than the consensus estimates among economists of 95.2.

The Present Situation Index, based on the current situation, fell 1.5 points in July but was still high at 131.5, which is well over the baseline score of 100.

The Expectations Index, which is based on consumers’ short-term outlook, actually improved, rising 4.5 points to 74.4.

It should be noted that while the expectations index gained from June, it is still low and below the threshold of 80 that typically signals the potential for a recession. The Expectations index has been below 80 for the past six months. However, it is up significantly from its recent low of 54.4 in May.

“Consumer confidence has stabilized since May, rebounding from April’s plunge, but remains below last year’s heady levels,” Stephanie Guichard, senior economist, global indicators at The Conference Board, said. “In July, pessimism about the future receded somewhat, leading to a slight improvement in overall confidence. All three components of the Expectation Index improved, with consumers feeling less pessimistic about future business conditions and employment, and more optimistic about future income.”

Tariffs remain a primary concern

The July report showed that tariffs remain the primary concern among consumers.

“Consumers’ write-in responses showed that tariffs remained top of mind and were mostly associated with concerns that they would lead to higher prices,” Guichard said. “In addition, references to high prices and inflation rose in July, even though consumers’ average 12-month inflation expectations eased slightly to 5.8%, down from 5.9% in June and a peak of 7% in April.”

That hesitancy showed as purchasing plans for cars and homes declined this month. However, those numbers have remained relatively stable over the past six months. Further, plans to purchase big-ticket items, like appliances and electronic goods, were mixed.

Also, consumers’ intentions to purchase more services ahead weakened, as nearly every services category saw confidence levels drop. Dining out saw one of the largest declines in spending intentions in July.

Transportation and lodging spending plans were lower in July, as were overall plans to take vacations. Interestingly, the surveyed revealed that slightly more consumers planned to travel abroad while US travel intentions declined.

Confidence in stock market rises

In addition, consumers showed greater confidence in the stock market. The July consumer confidence data said that 47.9% of consumers expect stock prices to increase over the next 12 months. That’s up from 37.6% in April.

Further, more consumers, about 21.2%, expect interest rates to fall, up from 18.4% in June. On the flip side, fewer consumers expect them to rise, 53% down from 57.1% in June. The Fed meets on Wednesday to decide whether or not to cut rates.

Finally, the survey also found that 17.5% of consumers expected more jobs to be available, up from 15.9% in June. Also, 18.2% of consumers expected their incomes to increase, which is improved from 17.6% in June.

The jobs report for July will come out on Friday, while PCE inflation data for last month will be released on Thursday.

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