The State of the Economy for June 2026

Speaker A: You are listening to C Suite Perspectives, a podcast by the Conference Board.

Speaker B: Welcome to C Suite Perspectives, a signature series by the Conference Board. I'm Dana M. Peterson, chief economist and leader of the Economy, Strategy and Finance center here at the Conference Board, and I'm also your guest host for today's episode. Joining me today is Dr. Alex Heil, senior economist of Energy, Infrastructure and Environment here at the Conference Board. In today's conversation, we'll discuss the latest US Consumer confidence report and also extreme heat, which is a global phenomenon impacting people and businesses. First, Alex will ask me about the June consumer confidence survey in the US and after the break, I will ask Alex about the implications of extreme heat. Alex, so great to have you today.

Speaker C: Thanks for having me, Dana. It's always great to, uh, be on a podcast with you.

Speaker B: Thank you.

Speaker C: So, um, then let me take over. Let's talk about consumer confidence. So, you know, let's jump right in. How were consumers feeling in June, Dana?

Speaker B: Consumers are feeling somewhat better in June compared to May. Um, indeed, confidence probably inched up as falling oil prices in recent weeks provided some relief to their inflation fears.

Speaker C: And is that, you know, if you compare the present situation with expectations, are there any differences in those two?

Speaker B: Sure, absolutely. Consumers appraisals of current business conditions were slightly more positive compared to last month. Um, as well, their expectations, uh, for business conditions. When it came to the labor market, uh, they were a little bit, um, less optimistic concerning the labor market. And we've been seeing that over the last few months, um, with more of them saying that jobs are hard to get versus jobs are easy to obtain. But consumers are anticipating little change in the labor market six months from now. And this was more or less offset, again, by the positive expectations for business conditions, but, but also their incomes.

Speaker C: It's. So this is a continuation of some of the trends over the last few months.

Speaker B: I think so. Certainly in terms of consumers, uh, feeling slightly better about, um, expectations, but also, uh, their concern, a little bit of a growing concern about employment, um, given the fact it's. It is difficult to find a job right now, as many businesses are neither hiring nor letting people go. Um, they're just kind of sitting tight, um, but also, um, feeling better about their incomes going forward, understanding that, you know, they've experienced really big inflation shocks in the first half of the year and hoping that those will, uh, dissipate over the balance of the year.

Speaker C: Right. That's very interesting. So is there anything else you can say about what consumers said about which factors are influencing the economy?

Speaker B: Yes, it's still the case, um, that consumers are mainly skewed towards pessimism in terms of things that they think are impacting the economy. So there were lots of reference, continued to be references to prices and oil and gas, but it was a little bit lower in terms of frequency but it was still quite elevated. What was notable, mentions of war, geopolitics and conflict. Also ease probably reflecting the fact that um, we did have uh, during the survey there were negotiations for ending the war and um, coming up with some kind of a peace agreement.

Speaker C: Right. That's very interesting how consumers are perceiving this. So against this backdrop of some of these trends, what were they saying about expectations for some of these concepts like inflation, interest rates, the stock market?

Speaker B: Sure, absolutely. Inflation expectations were somewhat less elevated, but it's still very high. And with that consumers continue to expect interest rates to be higher over the next 12 months. And certainly that makes sense. Uh, they understand that when inflation seems to be getting out of control, the Federal Reserve Board will keep interest rates either elevated where they are slightly restrictive or might even consider interest rate hikes. But the conference board is not expecting the Fed to uh, either hike or, or raise interest rates this year. But nonetheless consumers are ready for this. But when it comes to the stock market, the second half of June did include again an extension of the US Iran ceasefire and boosted consumers expectations of stock prices a year from now. And we've pretty much seen a lot of roller coasters, move type movement in the stock market. But overall the stock market has been rising and consumers do look at the stock market as a measure of their future employment, um, situation where if, if the stock market's riding rising, they believe their companies are doing well and that they're consider to have a job in the next year.

Speaker C: Right. So from the consumer's perspective, do you, would you say that the likelihood of recession, or at least the expectation thereof has improved from consumers end the share of consumers?

Speaker B: You said a recession over the next 12 months is somewhat likely rose, but overall recession expectations still remain pretty low. And that's important, um, just given what they're thinking about the stock market, interest rates, inflation. We did notice that current financial situations for consumers deteriorated. That's a third month in a row, um, with virtually the same proportion saying conditions are good versus bad. However, their views of their future financial situation were more optimistic. And that also gels with the idea that probably not going to have a recession, stock market's going to be better next uh, year even if inflation and interest rates continue to be somewhat Elevated.

Speaker C: Well that, that uh, brings us to uh, you know, purchases. So are consumers looking to buy more durable goods over the next six months? What do the data tell us?

Speaker B: Well, we saw an improvement in those saying they want to buy those big ticket items with the number saying no, shifting to maybe and the proportion of saying, of those saying yes, picking up modestly. Buying plans are still strongest for purchasing autos and that's, you know, over a six month annual basis, um, just averaging it out on a six month annual basis, looking forward. So over the next six months, consumers who are planning to buy big ticket items are very keen to buy a car. Um, also we noticed that home buying expectations rose, um, over the last six month moving average basis. And they also continue to rank furniture, followed by smartphones as the most desired items to purchase. So all this makes sense, right? If you buy a home, you might buy a car, you need to put furniture in the home. And I'm sure there's going to be some new version of cell phone that's going to come out that they're going to want to grab and get. Um, but it is the case though that spending plans for white goods and electronics ease a tad. Um, or they were just relatively changed on a six month moving average basis.

Speaker C: Right, Interesting. And that's consistent with some of the other data that you've been describing. What about services? Are consumers looking to buy or spend more money on services over the next six months?

Speaker B: Well, the numbers saying that they were planning to spend more on uh, services over the next six months shifted from no to maybe in June. But future spending plans on individual services were actually pretty mixed. Among all services categories. Restaurants, bars, takeout streaming, um, Internet mobile services and beauty and personal care remained among the top three spending targets. But when you look at what they're planning to spend on other types of just services in general, they're continuing to prioritize things that they need. So also in the top five we had spending on health care and also utilities and spending on other types of things were uh, a little bit down. And certainly when it comes to travel intentions within the next six months, those expectations eased in June, but um, predominantly fell for people who were looking to travel domestically. Um, while we continue to see a pickup in people wanting to kind of escape the US and travel abroad for a bit. Nonetheless, um, expected spending on hotels and motels as well as airfare and trains for personal travel were moderately higher in the month. And that's also consistent with the fact that we're starting the summer season and um, certainly Makes sense that consumers will think about traveling, uh, but it won't be in the US it's going to be in Europe or somewhere else.

Speaker C: Interesting. So taking that all together. So do you think this will support consumer spending, um, in the months and quarters ahead?

Speaker B: The fact that consumers are not expecting a recession and they're still saying good things about their incomes, we think that they're going to continue to spend. However, given their continued concerns about high interest rates and caused by, um, inflation, um, as well as some concerns about their finances, which include everything, wherever your income is coming from, plus whatever housing or financial assets you have, um, means that they're going to be spending a little bit less going forward than, you know, we've seen again because of the weight of the inflation. But there's still going to be positive consumer spending growth. We do expect the US Economy to expand at a decent clip, um, this year. Nowhere near a material slowdown or even recession.

Speaker C: Great. Well, that was, as usual, a great summary of the most recent consumer confidence survey. Thank you so much, Dana.

Speaker B: Thanks for those questions, Alex. We're going to take a short break, then we'll come back and discuss Extreme Heat with Alex.

Speaker A: What does the future of work mean for your employees? How will your company navigate the future of AI? Will there be a global recession? At the Conference Board, our experts translate the latest research and economic analysis into insights and real time problem solving for your organization. Membership at the Conference Board provides your team with an assortment of knowledge from economics, marketing and communications, governance and sustainability, public policy and human capital. As a member, you'll have access to our center experts member, exclusive events, data and benchmarking tools, and peer sharing that will help you understand the present and shape the future. Consider becoming a Conference board member today by visiting www.conference-board.org.

Speaker B: welcome back to C Suite Perspectives. I'm your host, Dina M. Peterson, chief economist and leader of the Economy Strategy and Finance Center. And here at the Conference Board once again I'm joined by Dr. Alex Heil, leader of energy infrastructure and environmental insights at tcb. Alex, it's so great to have you back.

Speaker C: Yeah, great. Likewise.

Speaker B: So, uh, Alex, currently about 100 million people in the US are under extreme heat watches. But this is not just a concern for people in the U.S. but throughout the world, is that correct?

Speaker C: That's absolutely correct. So you know, the US Is now having this extreme heat watch going into the fourth of July weekend. Um, but Europe just has experienced a fairly lengthy period of above normal temperatures. Temperature in Paris, France were above 40 degrees centigrade um, that's probably anywhere around 110 Fahrenheit. I don't know, depending on how the calculation is done here, which I can't do in my head right now. Um, and certainly this also means for other parts of the world, parts of India, parts of Africa, heat is becoming a concern and really an issue that everybody has to deal with, um, during the summer months on almost on a reoccurring basis.

Speaker B: Alex, can you tell us how scientists describe extreme heat? Is it based upon a certain degree or what, uh, is it?

Speaker C: Well, generally the way to look at this, I mean, I'm not sure if there's a specific definition, but generally the way to look at this is what is, you know, how much do temperatures spike above the average, the long term average, and what is the duration? So how long do they stay above that sort of average, you know, expected temperature? And you take those two together from a heat perspective alone, that can very quickly turn into extreme heat conditions that are then, um, having negative consequences for human health, have all sorts of economic consequences with it. But I think that's, that's the framework that, you know, folks that are in this, in this field really use in order to assess the severity of a heat wave, um, in various parts of the world.

Speaker B: Thank you, Alex. Which regions in the US Are most at risk?

Speaker C: Yeah, I think, you know, this, that's an interesting question because we certainly have parts of the US that are maybe more used to it. You take the American Southwest, some of the states like Nevada, Arizona, um, Southern California, you have, um, frequently heat events that are where temperatures are exceeding 100 degree Fahrenheit. And that makes for, um, you know, in the summer, very unpleasant conditions for especially people that spend, uh, longer periods of time outdoors. But it's also other parts of the country when, you know, populations are not used to some of these temperatures. So then, you know, if you're in, um, the Northeast of the United States, for instance, and all of a sudden temperatures spike, spike, it is just not the case that in those parts of the world either individuals or businesses are, you know, have either planned for it, are, you know, really adjusted to this already. So it is a tricky, um, question to talk about the risk, but I think risk can materialize in different forms. It really depends on what your expectations are.

Speaker B: So you've talked a lot about El Nino and you know, uh, warming of the atmosphere. So what are some of the causes of extreme heat?

Speaker C: Yeah, so extreme heat. So some of this can be related to El Nino conditions. Just because El Nino, these Long term recurring climate and weather phenomena, they may have, um, they change precipitation patterns, they change temperature patterns, and as a result of that, that can play into these extreme heat conditions. But it's also the rise of average surface temperatures globally. And we've documented, the scientists have documented this. We're roughly at one and a half degrees centigrade, um, rise of surface temperatures above pre industrial normal. And so under those conditions, at higher temperatures, even normal fluctuations, they can sometimes already then get into conditions that can be qualified and can be described as extreme heat. So sometimes it's not like you can pinpoint any one particular factor, but you can certainly point to overall phenomenon that uh, modify and that influence weather patterns globally as well as in different, uh, on different continents.

Speaker B: So you mentioned, um, weather patterns, um, that certainly will have large impacts on environments around the world. Um, but does it also raise risk for natural disasters given, you know, extreme heat might cause flooding or droughts or any of those types of things?

Speaker C: Absolutely. And we've seen this in the last few years in particular, I think when it came to wildfires in the west of the United States, sometimes extreme heat conditions, they dry out, uh, forests and so even, you know, sparks that under normal conditions wouldn't necessarily created a big fire condition all of a sudden turn into these really fast moving, fast spreading wildfires that have tremendous economic damages associated with them. So we find some of that. And also the heat has um, impacts on, you know, the degree of moisture that is, that is contained in heat in the air. And with that then certainly also come consequences for drought and precipitation overall. So I think there are really strong linkages and certainly also um, linkages to other extreme weather events that you've already alluded to.

Speaker B: Thank you, Alex. Now I mean it's pretty clear what the impact is on consumers, especially those who don't have air conditioners. Um, but let's delve into what extreme heat means for businesses. So let's just start with what are the costs?

Speaker C: Yeah, I think if we're looking at this and consumers and businesses, they're really related because you're not only talking about product market, but also labor market effect. So if we're just talking about businesses, there are a variety of costs, so there is greater cooling, there is um, productivity effect. So the workforce generally gets less productive at higher temperatures. People need to take more breaks. Productivity on a macroeconomic level has been shown to decline once average temperatures rise above 20 degrees centigrade or about 70 degree Fahrenheit. And those are meaningful impacts that affect then labor markets Overall, with more frequent breaks, you have to maybe move a shift that otherwise would be scheduled in the middle of the day. You have to shift it into the shoulder periods in the early morning or late afternoon when it's a little bit cooler. And all of that comes with disruptions that comes with additional costs. If you then even zoom out further, you can talk about what this means for supply chains, not just in the U.S. but in other parts of the world. Especially, especially if some of the heat has spiked. Some of the extreme weather events that are, that we are reading about, sometimes in terms of droughts, in terms of fires, and that can affect the availability and the prices of key inputs for production in this country for businesses of various types. And so you get to this point where heat has these really, these effects that find their way into all these different sectors of the economy. But I think, you know, the real tangible impacts for consumer businesses and workers are really how heat affects just the human body and what that means for the ability to actually hold a job productively and be able to, uh, perform a certain tax under extreme conditions.

Speaker B: Absolutely. Thank you for bringing in the human impact of this, um, and linking it so closely to businesses and how they operate. Can you tell us, uh, which industries or businesses are most negatively affected by extreme heat, given the human factor?

Speaker C: Yeah, no, that's a very good question. I think one would say maybe in a very narrow sense you would say, oh, these are the businesses that are located in these really hot areas. And so therefore they have to make adjustments, they have to plan accordingly. They have to set financial resources aside in order to deal with some of these impacts. That's all true, but I think it does have broader, wider circles that also affects this. Uh, so it's also businesses that have high electricity demands. The electric grid is under a lot of pressure during, um, you know, high temperature events, just not only because of the higher demands for air conditioning and cooling, but certainly also what the heat does to the infrastructure and what, what kind of constraints that places on, you know, some of these, these transmission lines, for instance. So, and then we're no longer talking about the businesses that may have a large workforce and they work in a traditional assembly or production environment, but it could, uh, even be a services business. Right? Services business, a data center that is highly dependent on electricity for production, for output. And so therefore heat is going to affect those businesses as well. I think when one thinks about this carefully, it is always, um, it becomes apparent to what extent these impacts really range widely across multiple sectors in the economy.

Speaker B: Thank you. Alex, um, there's always, uh, one hand and on the other hand, we're two handed economists. Which industries can actually benefit from providing solutions for extreme heat? Either B2B or B2C.

Speaker C: Yeah, I mean, I guess, you know, anybody's crisis is another person's opportunity. So certainly these, you know, if you're in the um, air conditioning business, if you're in the services business, that is actually addressing some of these impacts and allows for better planning and so mitigating some of these impacts, that can certainly be an industry that becomes critical in managing some of these heat conditions. And in addition to that, it could also be, you know, just to pick an example, in the power sector you could for instance, assume that businesses that provide backup power, they provide generators, they provide battery services of various types. In a world where with higher and extreme heat come outages in electricity, all of a sudden backup services are going to be in high demand. So while those businesses clearly are going to be affected themselves, the products and services that they're selling, they could be in higher demand. That is certainly also true.

Speaker A: Thank you.

Speaker B: So we've talked about the downsides and the potential opportunities. Um, so what should C suite executives be considering? Um, not only given the current heat wave spanning the world, at least the northern hemisphere, but just going forward to protect their businesses and their workers?

Speaker C: Yeah, I think that, you know, I feel like over the years our standard answers has always been you need comprehensive planning. And that is true, but I think it's more nuanced than that. So I think that sort of planning, business planning also includes risk management. You need to have a system in place with which you have identified some of the risks that your business is exposed to. And that's not only you know, the business itself, but also the workers, also the customers, because it's all interlinked at the end of the day. And so with those risks, it's also important to a provide some assessment of what financially is at stake and what backup opportunities exist in order to fill some of the gaps if some of these extreme weather events are actually disrupting businesses. So with all that in mind, then in the longer term, I think businesses also need to think about some of the long term effects in terms of where is their workforce going to be located, how much is the workforce going to be affected? Is there going to be a trend for workers to be moving to other parts of the country where they're not as exposed? And the same applies to inputs to resources where they are sourced from in other parts of the country and the world. So ultimately this is going to be also turning into a conversation of what about the location of the business, what about the location of the supply chain? Because transportation, if those supply chains become very long, is also going to be risky, it's going to be costly, it's going to be exposed. And so I think it does take really looking at this fragmented view and sort of this in a multidimensional sense, um, in order to appropriate plan for business conditions in the future.

Speaker B: Thank you, Alex. One final question. Can you please share with our listeners where they can find your insights?

Speaker C: Absolutely. Yeah. So we've written a lot about different types of extreme weather events. We've talked a lot about how businesses can address those issues as well as related issues. The easiest way to find it is to go to the TCB website, tcb.org and look for, um, energy, infrastructure and environment. There's a separate section where all this material lives. Or if you're just going to my own bio, my website. At the bottom of the bio is the big long list of all the reports that can be accessed. And I'm certainly always available for questions and for discussions and member briefings if there's additional interest to dive into those further.

Speaker B: Yes, and you'll also provide briefings with people who aren't members.

Speaker C: Exactly. That's also true.

Speaker B: Well, thank you so much, Alex. This has been a great conversation.

Speaker C: Thank you so much for having me, Dana.

Speaker B: Absolutely. And thanks to all of you for listening to C Suite Perspectives. I'm Dana and Peterson, and this series has been brought to you by the Conference Board.

Speaker A: You have been listening to C Suite Perspectives, a podcast by the Conference Board Board.