Mid-July Sees an Upward Trend in Consumer Sentiment
According to a survey conducted by the University of Michigan, sentiment among US consumers reached its most favorable reading since September 2021. The preliminary reading of the consumer sentiment index rose to 72.6 in early July, up from 64.4 in June. This exceeded the expectations of economists polled by The Wall Street Journal, who had estimated the indicator to be at 65.5.
Improvement in Current Economic Conditions and Short-Term Expectations
The survey revealed that both consumers’ current economic conditions and short-term expectations improved. The index measuring current economic conditions rose to 77.5 from 69.0 in the previous month, while the measure assessing short-term expectations climbed to 69.4 from 61.5 in June.
Factors Contributing to the Rise in Sentiment
According to Joanne Hsu, the director of the survey, the sharp rise in sentiment can be largely attributed to the continued slowdown in inflation and stability in labor markets. The optimistic reading of the survey was driven by a 19% surge in long-term business conditions and a 16% increase in short-run business conditions.
Inflation Expectations and Federal Reserve’s Officials
Consumers’ year-ahead inflation expectations saw little change, inching up to 3.4% in July from 3.3% in June. However, the inflation expectations for the next five years, which is closely monitored by Federal Reserve officials, slightly increased to 3.1%. This figure has remained within the range of 2.9% to 3.1% for 23 of the last 24 months.
Final Data for July Survey to be Published on July 28
The final data for this month’s consumer sentiment survey will be published on July 28, providing a comprehensive view of the current state of consumer sentiment in the US.