University of Michigan Reports Preliminary Results of Its Consumer Sentiment Index for August

The University of Michigan on Friday (8-11-23) released the preliminary results of its Consumer Sentiment Index for August:

• The Index of Consumer Sentiment declined to a reading of 71.2 in August, down from 71.6 in July. This is a month-over-month decline of 0.6% but up 22.3% year-over-year (58.2 in August 2022).
• The Current Economic Conditions increased to a reading of 77.4 in August, up from 76.6 in July. This is a month-over-month improvement of 1.0% and up 32.1% year-over-year (58.6 in August 2022).
• The Index of Consumer Expectations retreated to a reading of 67.3 in August, down from 68.3 in July. This is a month-over-month decline of 1.5% but up 16.0% year-over-year (58.0 in August 2022).

In remarks and analysis prepared to accompany the report, Surveys of Consumers Director Joanne Hsu said:

“Consumer sentiment was essentially unchanged from July, with small offsetting increases and decreases within the index. At 71.2 index points, sentiment is now about 42% above the all-time historic low reached in June of 2022 and is approaching the historical average reading of 86. In general, consumers perceived few material differences in the economic environment from last month, but they saw substantial improvements relative to just three months ago.

Year-ahead inflation expectations edged down from 3.4% last month to 3.3% this month, showing remarkable stability for three consecutive months. The current reading remains above the 2.3–3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations also remained stable at 2.9%, again staying within the narrow 2.9—3.1% range for 24 of the last 25 months. These expectations are elevated relative to the 2.2—2.6% range seen in the two years pre-pandemic.”