Preliminary results show consumer sentiment declined 2.2 points in July to 66.0, 5.5 points lower than one year ago. The Current Economic Conditions Index fell 1.8 points from the previous month to 64.1, 12.4 points lower than year-ago-levels. The Consumer Expectations Index fell 2.4 points from June, 1.1 points lower than the July 2023 Index.
“For the second straight month, consumer sentiment is essentially unchanged. July’s reading was a statistically insignificant 2 index points below last month, well within the margin of error. Although sentiment is more than 30% above the trough from June 2022, it remains stubbornly subdued. Nearly half of consumers still object to the impact of high prices, even as they expect inflation to continue moderating in the years ahead. With the upcoming election, consumers perceived substantial uncertainty in the trajectory of the economy, though there is little evidence that the first presidential debate altered their economic views,” said University of Michigan Surveys of Consumers Director Joanne Hsu.
Year-ahead inflation expectations fell for the second consecutive month, reaching 2.9%. In comparison, these expectations ranged between 2.3 to 3.0% in the two years prior to the pandemic. Long-run inflation expectations came in at 2.9%, down from 3.0% last month and remaining remarkably stable over the last three years. These expectations remain somewhat elevated relative to the 2.2-2.6% range seen in the two years pre-pandemic.
