The University of Michigan Consumer Sentiment Survey plummeted to its lowest level in seven months. The index reading for June came in at 65.6, down from 69.1 in May and under the consensus expectation of 72. In the current conditions and expectations categories, the survey fell below economists’ expectations.
Year-ahead inflation expectations were unchanged this month at 3.3%, but above the 2.3–3.0% range seen in the two years prior to the pandemic, according to the press release. Long-run inflation expectations rose from 3.0% last month to 3.1% in June, significantly above the 2.2-2.6% range seen in the two years pre-pandemic. This survey indicates how weak the U.S. economy is and how consumers are feeling the persistent inflation.
Joe Biden posted on X “Zero. That was monthly inflation in May. There is more to do still, but this is welcome progress.” Inflation was 3.3% in May, and services, shelter, and electricity increased by 5.3%, 5.4%, and 5.9%, respectively. A zero increase in June in the CPI reading is not zero inflation in the month. Consumers in America may find these optimistic messages exaggerated and almost propagandistic. Furthermore, CPI inflation should have been significantly lower, close to 2%, months ago. Is it welcome progress, as the president says? Not really. However, the underlying message of the X post is probably closer to “it could have been worse.”. [Read more…] about Why Consumer Sentiment Fell To A Seven-Month Low