US consumer confidence deteriorated again in the latest Conference Board survey for June. Digging into the detail, the decline was led by a significant fall in consumers' expectations about the future. With the labour market still strong their assessment of their present situation held up much better. The concern is that in the past, a sharp downward turn in consumer expectations about the future has sometimes been a warning sign that a recession was on the horizon. That said, equity markets have repriced significantly this year, already reflecting some risk of a recession. Nevertheless, equities tend to perform best when consumer confidence is rising. We therefore think that a balanced portfolio, with a neutral allocation to equities probably makes sense for now.

US consumer confidence continues to deteriorate

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