The University of Michigan’s Consumer Sentiment Index rose to 55.2 in July, up from 49.5 in June and improving for the second straight month. However, the index remained well below last July’s 61.7 due to concerns over the economy and inflation.
The Current Index rose to 54.8, up from 47.7 in June and below last July’s 68.0. The Expectations Index rose to 55.4, up from 50.7 in June and below last July’s 57.7.
Surveys of Consumers Director Joanne Hsu commented in a statement, “Consumer sentiment confirmed its early-month reading, landing almost 12 percent above June. Broad-based improvements were seen across all groups by income, education, wealth, age, and political party. Five-year expected business conditions reached a 12-month high, though it remains well under its historical average. Despite recent gains, sentiment is 11 percent below a year ago, reflecting a generally somber view of the economy amid five years of elevated inflation and persistent high prices. Consumers remain focused on pocketbook issues like purchasing power, while political or military developments remain more in the background. Interviews for this release spanned June 23 to July 27.
“Year-ahead inflation expectations ticked down from 4.6 percent in June to a still-elevated 4.2 percent this month. The current reading substantially exceeds the 3.4 percent seen in February before the Iran conflict began, along with all 2024 readings. Long-run inflation expectations held steady from last month at 3.3 percent, remaining a bit higher than the 2.8 percent to 3.2 percent range seen in 2024.”
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