Consumer Confidence Drops Sharply

The consumer confidence report is regarded as a leading economic indicator in that it's posted for the current month during the month. But the report for June looks like it could have been tracking May's conditions. "Escalation in trade and tariff tensions" is cited as a factor behind June's unexpected and very abrupt 10-point dip to 121.5, tensions that could have but apparently didn't weigh down May's results.

Jobs-hard-to-get in this report are closely tracked by forecasters as an early signal for the monthly employment report. This question improved very sharply in May to give a false signal for what proved to be a weak employment report. Now this question, surging 4.6 percentage points to 16.4 percent, is signaling significant weakness for June's employment report.

Other readings on jobs (the abundance of which is the strength of this report) are likewise unfavorable with fewer saying jobs are abundant and more seeing weakness for the jobs market six months out. Income prospects, reflecting the weaker jobs outlook, are also down.

And the delayed looking pattern for June also appears in inflation expectations which fell sharply during the initial escalation of US-China tariff actions in May but now are rising sharply, up 5 tenths to 5.1 percent which is high for this reading.

The outlook for the stock market also fits into this pattern, improving during the sell-off rout of May and now deteriorating substantially during June's strong recovery. Long out in front, bulls now trail bears 31.4 to 33.3 percent in the Conference Board's data.

The rival consumer sentiment report also pushed higher in May before falling back in the preliminary June report posted at mid-month. The exact timing of these gyrations may be hard to iron out but the signals are clear: uncertainty tied to trade, gyrations in the stock market, not to mention of the possibility of a slowing labor market are pulling down confidence.