Consumer confidence fell for the third straight month and new home sales declined more than expected in June, according to data released Tuesday, as high inflation weighs on the economy and a possible recession looms.
The Conference Board reported that consumer sentiment in July fell to 95.7, down from 98.4 in June, the lowest monthly rating since February 2021.
With inflation running at a 40-year high, the Federal Reserve is expected to raise interest rates again on Wednesday in a continued effort to cool the rate of price increases.
Lynn Franco, senior director of economic indicators at The Conference Board, said the declining consumer confidence suggests that “recession risks persist.”
“Concerns about inflation — rising gas and food prices, in particular — continued to weigh on consumers,” Ms. Franco said. “As the Fed raises interest rates to rein in inflation, purchasing intentions for cars, homes, and major appliances all pulled back further in July. Looking ahead, inflation and additional rate hikes are likely to continue posing strong headwinds for consumer spending and economic growth over the next six months.”
New home sales were down 8.1% in June, the lightest level in more than two years, although home prices were up 7.4% year over year.
The indicators will add more fuel to Republicans’ criticism of Democrats’ handling of the economy.
The White House is claiming that a possible report later this week of a second-quarter contraction doesn’t necessarily mean the economy is in recession, while critics say the administration is trying to change the generally accepted definition of a recession — two straight quarters of negative growth.