University of Michigan Reports the Final Results of Its Consumer Sentiment Index for July

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

• The Index of Consumer Sentiment declined to a reading of 66.4 in July, down from 68.2 in June. This is a month-over-month decline of 2.6% and down 7.1% year-over-year (71.5 in July 2023).
• Current Economic Conditions dropped to a reading of 62.7 in July, down from 65.9 in June. This is a month-over-month decline of 4.9% and down 18.0% year-over-year (76.5 in July 2023).
• The Index of Consumer Expectations decreased to a reading of 68.8 in July, down from 69.6 in June. This is a month-over-month decline of 1.1% but up 0.7% year-over-year (68.3 in July 2023).

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

“Consumer sentiment has remained virtually unchanged in the last three months. July’s reading was a statistically insignificant 1.8 index points below June, well under the margin of error. Sentiment has lifted 33% above the June 2022 historic low, but it remains guarded as high prices continue to drag down attitudes, particularly for those with lower incomes. Labor market expectations remain relatively stable, providing continued support to consumer spending. However, continued election uncertainty is likely to generate volatility in economic attitudes in the months ahead.

Year-ahead inflation expectations fell for the second straight month, reaching 2.9%. In comparison, these expectations ranged between 2.3% to 3.0% in the two years prior to the pandemic. Long-run inflation expectations came in at 3.0%, unchanged from last month and remaining remarkably stable over the last three years. These expectations remain somewhat elevated relative to the 2.2–2.6% range seen in the two years pre-pandemic.”