The shadow of tariffs lingers as U.S. consumer confidence unexpectedly declines in June

In June, U.S. consumer confidence unexpectedly fell, highlighting ongoing concerns about the potential impact of high tariffs on the economy and job market.

According to data released by the Conference Board on Tuesday, the consumer confidence index dropped 5.4 points to 93 in June, below the expected range of all economists surveyed by foreign media. The decline in the index nearly erased the rebound seen in May due to the temporary tariff relief agreement reached between China and the U.S.

The data showed that the index reflecting consumers' expectations for the next six months fell by 4.6 points, with the proportion of respondents expecting improved business conditions experiencing the largest drop in over two years. The current economic conditions index also fell by 6.4 points.

Heather Long, chief economist at the Navy Federal Credit Union, commented: "In the current environment, it is not surprising that consumers are cautious about making large purchases. They are essentially in a wait-and-see mode, and unless absolutely necessary, they will not buy homes, cars, or major appliances. It is a 'highly cautious economy' right now."

The survey was conducted up to June 18, just five days after Israel launched a series of attacks on Iranian targets. Although geopolitical issues were mentioned by some respondents, the impact remained limited, with tariff issues still at the core of most people's concerns.

The data showed that the proportion of consumers who believe "jobs are plentiful" fell to 29.2%, the lowest level in over four years. The proportion of those who think "finding a job is difficult" slightly decreased. The difference between the two (an important indicator for economists measuring labor market tightness) dropped to 11.1 percentage points, the lowest level since March 2021.

Despite this, Federal Reserve Chairman Jerome Powell testified before Congress on Tuesday that the job market and overall economy remain robust. He also emphasized that policymakers are not in a hurry to cut interest rates and are still waiting for clearer signals regarding trade policy and economic direction.

Although the proportion of consumers expecting income growth in the next six months has decreased, the Conference Board noted that most consumers still hold a relatively optimistic view of their personal financial situation, likely supported by the rebound in the U.S. stock market and improved investment market outlook.

In terms of purchasing willingness, the intent to buy large-ticket items showed divergence; the intention to purchase cars remained unchanged, while the number of consumers planning to buy homes decreased. Previous data indicated that U.S. retail sales had declined for the second consecutive month in May.

Notably, the proportion of consumers expecting interest rates to rise in the coming year increased to 57%, the highest level since October 2023.

Since the Trump administration reinstated tariff policies to address trade imbalances, promote manufacturing return, and strengthen the national industrial base, U.S. consumer confidence has shown a gradual downward trend Bloomberg Economics economist Eliza Winger pointed out: "Consumer confidence in June nearly erased all the rebound from May, and tariffs remain the biggest concern. As certain goods may face price increases this summer, consumer anxiety will further intensify."

In fact, American companies are also struggling to adapt to the rapidly changing tariff policies. In April of this year, the U.S. government announced a new round of high tariffs with multiple trading partners, and although the implementation date was ultimately postponed to July, it still caught companies off guard. At the same time, many companies also have to deal with tariffs targeting specific industries, such as steel and aluminum.

Recent survey data shows that U.S. manufacturers are facing higher input costs and are passing most of the cost increases onto consumers