NEW YORK (FNS) -- Higher prices at the gas pump may have cost consumers some of their confidence in the economy, as well as some of their hard-earned cash.
The Conference Board's Consumer Confidence Index declined six points in June to 138.8, after rising sharply in May when it hit 144.7. The Present Situation Index dipped to 180.2 in June from 183.6, while the Expectations Index posted a sharper drop to 111.2 from 118.7.
Lynn Franco, director of the Conference Board's consumer research center, said in a statement, "While latest signals suggest that U.S. economic activity should decelerate in coming months, consumers are not expecting this record-breaking economic expansion to end any time soon."
John Lonski, chief economist at Moody's Investor Service, the credit ratings agency, said, "While the economy is decelerating, there's no reason to believe that this will be an ongoing deceleration for household expenditures that will deteriorate to an outright collapse."
The economist observed that despite higher gasoline prices and Federal Reserve efforts to slow the economy, both consumer confidence and economic conditions are still close to record highs.
Lonski explained that June's dip in confidence levels is a reflection of how the pace of sales at retail "cannot be sustained. It is impossible for consumer spending to endlessly outpace the growth in wages and salaries."
Retailers also would be mistaken "to assume that sharply lower gas prices will provide consumers with additional discretionary income," Lonski said. "The cost side is more difficult to manage, with profit margins getting squeezed if consumers spend less, gas prices affecting transportation costs and labor costs rising."