MNI INTERVIEW: US Inflation Worries Simmer - Conference Board

U.S. consumers' top concern remains stubbornly high prices amid uncertainty over how tariffs will feed into costs, Conference Board senior economist Stephanie Guichard told MNI, noting rising worries about the labor market as well.  

Consumers "pay more attention to prices because they've gone through a few years of inflation," Guichard said in an interview.

"Consumer confidence has been moving sideways since May. But overall, it's quite stable." While "consumers' appraisal of current job availability has been slowly but steadily deteriorating since the end of the year," inflation remains the main concern for Americans. 

The Conference Board’s gauge of confidence was down 1.3 points in August to 97.4. Consumers' expectations six months ahead decreased by 1.2 points to 74.8, now below 80 for the seventh straight month, a marker that usually signals a recession ahead. The year-ahead inflation expectations increased from 5.7% to 6.2% in August, the highest since May.

"We've seen more volatility in the past eight months. Now we have all the concerns about tariffs and the persisting uncertainty of how much of tariffs will be passed through to consumers." (See: MNI INTERVIEW: Powell Leaning Toward September Cut - Blinder) 

The Conference Board survey showed the share of consumers expecting interest rates to rise increased to 54.0% from 53.1% in July and fewer consumers expected interest rates to fall, 20.9% vs 21.4% in July.

Views of the labor market cooled. About 30% of consumers said jobs are plentiful, up from 29% in June. But the number who said jobs are hard to get grew, rising to 20%, from 19% a month earlier. 

The differential, which economists track to get a sense of consumers’ mood about the labor market, shrank to 9.7 from 11.0 in July, and is now at the lowest since February 2021. It has declined for eight consecutive months now from a recent peak of 22.2 in December.

While some point to the differential as a sign implying upward pressure on the unemployment rate, Guichard suggested more data is needed.