President Donald Trump’s proposed China tariffs could soon take effect, and the deepening trade war is beginning to impact consumer confidence.
The Conference Board said today its consumer confidence index declined to 121.5 in June, down from 134.1 in May. It is the index’s lowest point in nearly two years — and a sign that consumers are worried about the much-discussed tariff situation. “After three consecutive months of improvement, consumer confidence declined in June to its lowest level since September 2017,” said Lynn Franco, senior director of economic indicators at The Conference Board. “The decrease in the index was driven by a less favorable assessment of business and labor market conditions.”
The group said consumers’ short-term outlook for income, business and labor market conditions was also a concern — that decreased to 94.1 in June from 105 in May. “The escalation in trade and tariff tensions this month appears to have shaken consumers’ confidence,” said Franco. “Although the index remains at a high level, continued uncertainty could result in further volatility in the Index and, at some point, could even begin to diminish consumers’ confidence in the expansion.”
CEOs, retailers and trade organizations have prepared to address the impact of the 25% duties on $300 billion worth of products, which include a wide variety of consumer goods such as footwear, apparel and fashion accessories.
This week, both Trump and Chinese president Xi Jinping are expected to come together in a possible make-or-break meeting at the G20 Summit in Osaka, Japan — the first face-to-face talks between the world’s two largest economies since last month’s failed negotiations.