Americans' optimism about the economy faded as Iran tensions escalated

CNN

24-06-2025

Consumer confidence dropped last month to a reading of 93, a 5.4 point decline from May, according to data the Conference Board released on Tuesday.
Consumers had been feeling better after an agreement was secured between the United States and China to lower massive tariffs on each other — but mounting uncertainty over President Donald Trump's economic policy and tensions in the Middle East are leaving consumers feeling less gung-ho about what the US economy has in store.
The drop in consumer confidence, which erased nearly half of last month's gain, is in contrast to the one-point bump that economists polled by FactSet were anticipating.
The survey's cutoff date was June 18, days before the US bombed Iran, targeting its three main nuclear sites. Stephanie Guichard, senior economist overseeing global indicators at the Conference Board, noted, 'References to geopolitics and social unrest increased slightly from previous months but remained much lower on the list of topics affecting consumers' views.'
Far more pertinent to consumers were tariffs, which 'were frequently associated with concerns about their negative impacts on the economy and prices,' Guichard said in a statement published Tuesday.
'As we wait to see the full impact of tariffs on prices, this uncertain sentiment could trigger reduced consumer spending,' Elizabeth Renter, senior economist at NerdWallet, said in a note Tuesday. 'After all, if you can't be sure of how big your grocery bill will be in coming months, it's difficult to budget for it.'
Thus far, the impact of higher tariffs hasn't shown up in headline inflation data. However, individual items, such as electronics, have become more expensive, Federal Reserve Chair Jerome Powell noted during the central bank's post-monetary policy meeting press conference last week.
More consumers noted in the survey they were putting off purchases of electronics as well as homes. But purchases for other big-ticket items like cars and appliances held strong.
But the share of consumers expecting a recession over the next 12 months rose slightly last month.
'In this kind of environment, it's not surprising that consumers are hesitant to make big purchases,' Heather Long, chief economist at Navy Federal Credit Union, said in a note Tuesday. 'They are sitting on the sidelines and only buying homes, cars and appliances if they absolutely must. This is an 'abundance of caution economy.''
This story is developing and will be updated.