Consumer Sentiment Fades at End of June on Economic Outlook
American consumers became slightly more downbeat at the end of June than earlier in the month on concerns about the economy’s progress even before possible repercussions stemming from the U.K.’s decision to leave the European Union.
The University of Michigan’s final index of consumer sentiment fell to 93.5, down from a preliminary reading of 94.3 and compared with 94.7 in May. The median projection in a Bloomberg News survey called for 94.1.
While households remained upbeat about their current financial situations, they expected slower employment gains in the year ahead and a higher jobless rate as the economy cools. Results of the Brexit vote that hammered financial markets risk weighing more on sentiment and possibly consumer spending.
“Consumers were a bit less optimistic in late June due to rising concerns about the prospects for the national economy,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement. They “increasingly expect a slower pace of economic growth in the year ahead.”
The measure of consumer expectations dropped to 82.4 in June from 84.9 a month earlier.
So far, consumers remain optimistic about their current financial situations. Respondents voiced the most positive assessments about their finances since late 2000, Curtin said. They were also sanguine about inflation.
The expected inflation rate in the next year was 2.6%, up from 2.4% in May. Americans expected inflation to be 2.6% as well within five to 10 years, compared to 2.5% in May. The preliminary expected inflation for the longer term was 2.3%, the lowest the survey had ever recorded.
The proportion of Americans in a better financial situation held at 49% in June. While consumers expected nominal income gains of 1.6% for the remainder of the year, their expectations of incomes after adjusting for inflation were the most upbeat since January 2007.
The report’s current conditions index, a gauge of consumer views on their personal finances, increased to 110.8 from 109.9 in the prior month. The preliminary figure was 111.7.
The Michigan report is at odds with the June 23 Bloomberg Consumer Comfort Index measure, which marked the largest improvement in sentiment in a year and a half.
