Americans' Sentiment Falls as Worries Multiply Over Tariffs
(Bloomberg) -- U.S. consumer sentiment dipped to a six-month low in July as Americans became increasingly concerned about the fallout from an expanding trade war, a University of Michigan survey showed Friday.
Highlights of Michigan Sentiment (July, Preliminary)
While sentiment remained relatively elevated as a tight labor market and tax cuts continue to buoy incomes in the world’s largest economy, Americans’ worries over tariffs “greatly accelerated in early July,” according to the report.
Thirty-eight percent of respondents spontaneously mentioned a potential negative impact from tariffs in the latest survey, up from 21 percent in June and 15 percent in May. The worries were more widespread among people in the top third of incomes, reaching to 52 percent who expect harm from the levies.
The university said that the level of unfavorable references to government economic policies tied a peak in 2013 amid a U.S. government shutdown.
Even with the growing concerns over trade, consumers had plenty to be happy about. Americans anticipated income gains of 2.4 percent, close to the previous month’s 2.5 percent, which was the highest since 2008; those under age 45 expected 5.1 percent, the most in 18 years. Projected home-price gains of 3 percent a year for five years was the highest since 2007.
Such sentiment, along with gasoline prices that have eased from a three-year high, should help support continued gains in consumer spending, the biggest part of the U.S. economy.
“The continuing strength has been due to favorable job and income prospects,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement. At the same time, “the planned expansion of tariffs on Chinese goods could further escalate consumers’ concerns about the impact on their own financial situation and purchases.”
- Consumers saw inflation rate in the next year at 2.9 percent after three-year high of 3 percent the prior month
- Inflation rate over next five to 10 years seen at 2.4 percent, lowest in 2018, down from 2.6 percent
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