Consumer Sentiment decreased a mere 0.3 points in July to 97.9, according to the University of Michigan Consumer Sentiment Index. July’s figure is 4.8 percent above the July 2017 index. The Current Economic Conditions Index declined 1.8 points to 114.4. The reading was 0.9 percent above the July 2017 index. The Consumer Expectations Index rose 1.2 points to 87.3 and was 8.4 percent higher than a year ago.
“Despite the expectation of higher inflation and higher interest rates during the year ahead, consumers have kept their confidence at high levels due to favorable job and income prospects. This mix of positive and negative expectations is similar to past expansions, and, as in the past, it will prevail as long as increases in inflation and interest rate hikes remain modest,” said Richard Curtin, chief economist of UM Surveys of Consumers.
“What is unique about the current situation is the potential impact of tariffs on the domestic economy. Concerns about tariffs greatly accelerated in the July survey. Consumers who had negative concerns about the tariffs voiced a much more pessimistic economic outlook. Of course, these negative economic expectations could quickly disappear if the trade issues with Europe are promptly settled and immediately followed by agreements with China, Canada, and Mexico. Resolution is critical to forestall decreases in consumer discretionary spending as a precaution against a worsening economy.”
Read the University of Michigan Surveys of Consumers release.