The Conference Board's Consumer Confidence Index dropped to 58.5 in June from 61.7 in the prior month. The Expectations Index (72.4 vs. 76.6 in May) and the Present Situation Index (37.6 vs. 39.3) fell in June. The soft labor market situation and rising food energy prices have played a role in reducing optimism of consumers.

The gloomy outlook for the labor market is reflected in the responses of the survey. The percentage of respondents indicating that "jobs are plentiful" dropped to 5.2% in June from 5.7% in the prior month, while the percentage indicating that "jobs are hard to find" rose to 43.8% from 43.5% in May. The net of these two indexes is closely tied with the jobless rate of the nation (see Chart 4). The net reading of these two indexes is closely tied to the unemployment rate (see Chart 4). The difference between the two indexes increased to 38.6 in June from 37.8 in May, implying that a higher unemployment rate is entirely possible.

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com

Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

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