Consumer sentiment unchanged as uncertainty reigns

Consumer sentiment remained essentially unchanged for the second straight month in July, according to the University of Michigan Surveys of Consumers. .The index of consumer sentiment fell 3.2 percent to 66.0 from 68.2 in June. The drop was considered within the margin of error. The index for current economic conditions fell 2.7 percent to 64.1 from 65.9, and is 16.2 percent below its mark of 76.5 a year ago. The index of consumer expectations fell 3.4 percent to 67.2 from 69.6, and is 1.6 percent below 68.3 last July. .Although consumer sentiment has risen more than 30 percent from June 2022, it remains low as nearly half of consumers are still wary of the impact of high prices as they expect inflation to continue easing in the coming years. ."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 Surveys of Consumers Director Joanne Hsu. .Year-ahead inflation expectations dropped for the second straight month, to 2.9 percent, which is slightly higher than its range of between 2.2 percent and 2.6 percent in the two years before the pandemic. .The Conference Board Consumer Confidence Index fell to 100.4 from 101.3 in May. The index based on current business and labor market conditions increased to 141.5 from 140.8 the previous month. The index based on consumers' short-term outlook for income, business and labor market conditions fell to 73.0 from 74.9 in May. For five straight months the index has remained below 80, the threshold which typically signals recession expectations.."Confidence pulled back in June but remained within the same narrow range that's held throughout the past two years, as strength in current labor market views continued to outweigh concerns about the future," said Chief Economist Dana Peterson. "However, if material weaknesses in the labor market appear, confidence could weaken as the year progresses."