University of Michigan Final Consumer Sentiment Index Declines for June 2022

The University of Michigan today (6-24-22) released its preliminary Consumer Sentiment Index (CSI) for June. The Index of Consumer Sentiment dropped to a reading of 50.0, down from May’s reading of 58.4. This is a month-over-month decrease of -14.4% and down -41.5% year-over-year (85.5 in June 2021).

The Current Economic Conditions fell to a reading of 53.8 in June, down from 63.3 in May. This is a month-over-month decrease of -15.0% and down -39.3% year-over-year (88.6 in June 2021).

Finally, the Index of Consumer Expectations declined to a reading of 47.5 in June, down from 55.2 in May. This is a month-over-month decrease of -13.9% and down -43.1% year-over-year (83.5 in June 2021).

In remarks and analysis prepared to accompany the release of the June CSI, Joanne Hsu, Director of Surveys for the University of Michigan, said:

“The final June reading confirmed the early-June decline in consumer sentiment, settling 0.2 Index points below the preliminary reading and 14.4% below May for the lowest reading on record. Consumers across income, age, education, geographic region, political affiliation, stockholding, and homeownership status all posted large declines. About 79% of consumers expected bad times in the year ahead for business conditions, the highest since 2009.

Inflation continued to be of paramount concern to consumers; 47% of consumers blamed inflation for eroding their living standards, just one point shy of the all-time high last reached during the Great Recession. Since the preliminary reading, the Federal Reserve raised interest rates by 75 basis points, exceeding the 50-basis point hike that had been previously telegraphed. The final June reading of the median expected year-ahead inflation rate was 5.3%, little changed from mid-month or the preceding four months. In contrast, long run expectations receded from its mid-month reading of 3.3% and settled at 3.1%, back within the 2.9-3.1% range seen in the past 10 months. Consumers also expressed the highest level of uncertainty over long-run inflation since 1991, continuing a sharp increase that began in 2021.”