University of Michigan Releases Preliminary Consumer Sentiment Results for July

On Friday, the University of Michigan released the preliminary results of its Surveys of Consumers for July.

• The Index of Consumer Sentiment rose to 54.4 in July, up 9.9% from 49.5 in June. Year-over-year, the index was down 11.8% from 61.7.
• Current Economic Conditions rose to 54.9 in July, up 15.1% from 47.7 in June but down 19.3% from 68.0 a year earlier.
• The Index of Consumer Expectations increased to 54.0, up 6.5% from 50.7 in June but down 6.4% from 57.7 a year earlier.

In remarks accompanying the release, Surveys of Consumers Director Joanne Hsu said:

“With the second straight month of 10% jumps, consumer sentiment climbed to its highest reading since February of this year on the basis of easing price pressures at the pump in recent weeks. All five index components improved, led by significant 20% increases in buying conditions for durables as well as year-ahead business conditions. This month’s rise in sentiment was pervasive across the population, seen across groups by age, income, wealth, and political party. Particularly strong increases were seen among consumers without a bachelor’s degree. However, with prices remaining frustratingly high, consumers are hardly ebullient about the economy; sentiment is down 12% from a year ago. Thus, sentiment’s upward momentum may prove difficult to sustain if recent declines in gas prices continue to reverse course. Interviews for this release spanned June 23 to July 13, with more than 70% completed before the resumption of US strikes against Iran on July 7 and the subsequent increase in gas prices.

Year-ahead inflation expectations ticked down from 4.6% in June to a still-elevated 4.2% this month. The current reading substantially exceeds the 3.4% 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%, remaining a bit higher than the 2.8–3.2% range seen in 2024.”