Consumer sentiment rises
Consumer sentiment has risen for the first time in six months, according to data collected by the University of Michigan.
Sentiment rose almost 16% from last month, but outlooks remain approximately 20% below December 2024, not long after the election. Michigan's Surveys of Consumers Director Joanne Hsu writes:
"These trends were unanimous across the distributions of age, income, wealth, political party, and geographic region. Moreover, all five index components rose, with a particularly steep increase for short and long-run expected business conditions, consistent with a perceived easing of pressures from tariffs."
Hsu also shares the take that consumers appear to have settled somewhat from fears regarding tariffs, despite the ongoing lack of policy clarity. However, there are still widespread concerns about the economy. Respondents' views of business conditions, personal finances, buying conditions for big ticket items, labor markets, and stock markets all remain far below high-water marks from December 2024.
Inflationary fears seem to have eased, too. Year-ahead inflation expectations were 6.6% last month and dipped to 5.1% this month. Long-run inflation expectations, meanwhile, dipped for the second straight month, from 4.2% in May to 4.1% in June. Both readings are the lowest in three months, Michigan finds. Hsu concludes:
"Consumers’ fears about the potential impact of tariffs on future inflation have softened somewhat in June. Still, inflation expectations remain above readings seen throughout the second half of 2024, reflecting widespread beliefs that trade policy may still contribute to an increase in inflation in the year ahead."
