The final reading for June will be published on June 24.
All components of the index fell, Hsu said, noting a 24% drop in the year-ahead outlook in business conditions and a 20% decline in consumers’ assessments about their personal finances.
About 46% of consumers surveyed laid the blame on inflation, an increase from 38% in May, Hsu said.
“This share has only been exceeded once since 1981, during the Great Recession,” she said. “Overall, gas prices weighed heavily on consumers, which was no surprise given the 65-cent increase in national gas prices from last month.”
Half of consumers mentioned gas prices during the interviews, she said.
“Consumer spending has long defied the fluctuations in consumer sentiment,” said Greg McBride, Bankrate’s chief financial analyst. “What we’re likely to see this time isn’t that consumers cut back on spending, it’s just that they spend differently. This is an environment where necessities are chewing up more and more of a household’s spendable dollars.”
How consumers react from here could help or hurt the Federal Reserve’s efforts to rein in inflation, Kurt Rankin, PNC senior economist, wrote in a note.
“Consumers will either choose to continue spending despite higher prices, making the Fed’s choices more difficult through the second half of this year, or to pull back spending in response to higher prices — especially regarding everyday necessities,” he said. “A spending pullback would slow the economy more on the immediate horizon but could be the difference in shallowing the depth of any potential recession in 2023 by making the Fed’s job a bit easier.”