Consumer Sentiment Drops in July

Consumer Sentiment was 81.2 in July according to the University of Michigan Consumer Sentiment Index. July’s figure was 4.3 points lower than the June reading but is 8.7 points above the July 2020 index. The Current Economic Conditions Index fell 4.1 points from the previous month to 84.5 but is 1.7 points above the July 2020 index. The Consumer Expectations Index decreased 4.5 points to 79.0 but is 13.1 points higher from a year ago.

“Consumer sentiment edged upward at the end of July, although it still posted a monthly decline of 5.0%. The largest monthly declines remained concentrated in the outlook for the national economy and complaints about high prices for homes, vehicles, and household durables. While most consumers still expect inflation to be transitory, there is growing evidence that an inflation storm is likely to develop on the not-too-distant horizon. The improved finances of consumers have greatly reduced consumers’ resistance to price increases. While firms have reacted to their own supply and labor shortages with a greater readiness to increase prices as well as wages. Consumers and firms currently justify their actions as temporary adjustments due to the pandemic”, said Richard Curtin, chief economist of UM Surveys of Consumers.

Read the University of Michigan Surveys of Consumers release.