U.S. Consumer Sentiment Held Up in July on Brighter Outlook
U.S. Consumer Sentiment Held Up in July on Brighter Outlook
(Bloomberg) -- U.S. consumer sentiment held steady in July near
historically elevated levels while expectations improved in the
later part of the month as a strong labor market helped to
offset worries about slower global growth and trade tensions.
The University of Michigan's final sentiment index held at 98.4,
matching the preliminary reading and up slightly from 98.2 in
June, data showed Friday. The gauge of expectations improved
slightly to 90.5, the best since September, while the measure of
current conditions eased somewhat to 110.7.
Key Insights
- The mood among Americans remained stable amid low unemployment that’s helping to underpin personal consumption, the biggest driver of second-quarter economic growth. But President Donald Trump's latest threat to increase tariffs on Chinese goods may weigh on sentiment, even after the Federal Reserve cut interest rates this week for the first time in a decade.
- Main reading is near a 14-year high of 101.4 reached early last year.
- The data follow better consumer sentiment readings elsewhere. The Conference Board's confidence measure rebounded in July to the best level in eight months while Bloomberg's weekly comfort gauge matched the best reading since 2000 on stronger views of the buying climate and personal finances.
Official's View
“Economic confidence has been remarkably stable since the start
of 2017, despite ongoing trade uncertainties,” amid resilient
personal finance views, Richard Curtin, director of the
University of Michigan consumer survey, said in a statement. “A
key issue is whether the recently announced tariffs on Chinese
imports, covering more commonly purchased consumer items, will
spark an even more cautious outlook.”
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- Consumer expectations for inflation were little changed, with price gains over the coming year slipping to 2.6% from 2.7% in June. Five-year estimates firmed to 2.5% after a 2.3% reading in the prior month that matched a record low, an improvement that would be welcomed by Fed policy makers who have been concerned that inflation is persistently below their target.
- In the past three months, confidence in government economic policies reached its highest average level since May 2002, the report said.
- The final July reading was about in line with economist estimates for 98.5 in Bloomberg's survey.
- A measure of buying conditions for durable goods slipped to 156 from 160 in June.
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