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

The University of Michigan on Friday (7-14-23) released the preliminary results of its Consumer Sentiment Index (CSI) for July.

• The Index of Consumer Sentiment rose to a reading of 72.6 in July, up from 64.4 in June. This is a month-over-month increase of 12.7% and up 41.0% year-over-year (51.5 in July 2022).
• The Current Economic Conditions increased to a reading of 77.5 in July, up from 69.0 in June. This is a month-over-month improvement of 12.3% and up 33.4% year-over-year (58.1 in July 2022).
• The Index of Consumer Expectations climbed to a reading of 69.4 in July, up from 61.5 in June. This is a month-over-month increase of 12.8% and up 46.7% year-over-year (47.3 in July 2022).

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

“Consumer sentiment rose for the second straight month, soaring 13% above June and reaching its most favorable reading since September 2021. All components of the index improved considerably, led by a 19% surge in long-term business conditions and 16% increase in short-run business conditions. Overall, sentiment climbed for all demographic groups except for lower-income consumers. The sharp rise in sentiment was largely attributable to the continued slowdown in inflation along with stability in labor markets. As seen in the chart, sentiment is now about halfway between the all-time historic low of 50 from June 2022 and the February 2020 pre-pandemic reading of 101.

Year-ahead inflation expectations were little changed, inching up from 3.3% in June to 3.4% in July and down from the high point of 5.4% from April 2022. Long-run inflation expectations were also virtually unchanged from June at 3.1%, again staying within the narrow 2.9–3.1% range for 23 of the last 24 months.”