The University of Michigan today (7-15-22) released its Preliminary Consumer Sentiment Index (CSI) for July. The Index of Consumer Sentiment increased to a reading of 51.0 in July, up from its 50.0 reading in June. This is a month-over-month increase of 2.2% but down 37.1% year-over-year (81.2 in July 2021).
The Current Economic Conditions increased to a reading of 57.1 in July, up from its 53.8 reading in June. This is a month-over-month increase of 6.1% but down 32.4% year-over-year (84.5 in July 2021).
Finally, the Index of Consumer Expectations declined slightly to a reading of 47.3 in July, down from its reading of 47.5 in June. This is a month-over-month decrease of 0.4% and down 40.1% year-over-year (79.0 in July 2021).
In remarks and analysis prepared to accompany the release of the Consumer Sentiment Index, Joanne Hsu, Director of Surveys for the University of Michigan, said:
“Consumer sentiment was relatively unchanged, remaining near all-time lows. Current assessments of personal finances continued to deteriorate, reaching its lowest point since 2011. Buying conditions for durables adjusted upwards, owing both to consumers who cited easing supply constraints and those who believed that one should buy now to avoid future price increases, which would exacerbate inflation going forward. Even with the adjustment, buying conditions remained 26% lower than a year ago.
Consumers remained in agreement over the deleterious effect of prices on their personal finances. The share of consumers blaming inflation for eroding their living standards continued its rise to 49%, matching the all-time high reached during the Great Recession. These negative views endured in the face of the recent moderation in gas prices at the pump.
Inflation expectations have held steady or improved somewhat. The median expected year-ahead inflation rate was 5.2%, little changed from the past five months. Median long run expectations fell to 2.8%, just below the 2.9-3.1% range seen in the preceding 11 months. Inflation uncertainty continued to grow, with 26% of consumers expecting prices to stay the same or fall over the next 5 to 10 years, up from 11% a year ago.”
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