US Consumer Sentiment Weaker than Expected

The University of Michigan's consumer sentiment for the US dropped to 97.9 in June 2019 from 100.0 in the previous month, slightly missing market consensus of 98.0, a preliminary estimate showed.

The consumer expectations sub-index slumped to 88.6 in June from the previous month's 93.5; while the gauge for current economic conditions increased to 112.5 from 110.0.

Inflation expectations for the year ahead fell to 2.6 percent in June from 2.9 percent in May; and the 5-year outlook dropped to 2.2 percent from 2.6 percent.

"In early June, consumer sentiment reversed the May gain due to tariffs as well as slowing gains in employment. Some of the decline was due to expected tariffs on Mexican imports, which may be reversed in late June, but most of the concern was with the 25% tariffs on nearly half of all Chinese imports. Consumers responded by lowering growth prospects for the national economy, and as a consequence, reduced the expected gains in employment. Consumers anticipated an average long-term inflation rate of just 2.2%, the lowest rate the surveys have recorded since the question was introduced forty years ago. The sole component of the Sentiment Index that improved in early June was buying plans for large household durables. That improvement, however, was due to consumers favoring tariff induced buy-in-advance price rationales. In the past year, spontaneously unfavorable references to tariffs moved in tandem with unaided mentions of buy-in-advance rationales for household durables. Negative mentions of tariffs were spontaneously made by 40% of all consumers in early June, up from 21% in May and the prior high of 35% in July 2018; unaided references to buy-in-advance price rationales were mentioned in early June by 19%, up from 12% in May, and just below the 21% in March 2018 (when Trump first announced tariffs on home appliances). Overall, the data indicate that real personal consumption expenditures will advance by 2.5% in the year ahead.", Surveys of Consumers chief economist, Richard Curtin said.

US Consumer Sentiment Weaker than Expected

University of Michigan | Joana Ferreira |
6/14/2019 2:04:35 PM