The US consumer confidence unexpectedly fell to a seven-month low, while long-term inflation expectations saw a slight rebound

Wallstreetcn
2024.06.14 14:01
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Analysis suggests that the decline in consumer sentiment in the United States coincides with signs of a weak labor market. While low-income families have seen significant wage growth, their budgets remain tight even with inflation slowing down, as prices continue to stay high. The views of middle-income consumers are similar to those of low-income consumers, which is different from historical patterns

Due to the continued impact of high levels of inflation on personal financial situations, the University of Michigan Consumer Confidence Index in the United States unexpectedly fell to a seven-month low in early June, with long-term inflation expectations rising slightly.

The preliminary value of the University of Michigan Consumer Confidence Index in the United States in June was 65.6, significantly below the expected 72, with the previous value in May at 69.1. Data released last month showed that the final value of the University of Michigan Consumer Confidence Index in the United States in May was at a six-month low, dropping sharply from April.

In terms of sub-indices, the current conditions index in June had a preliminary value of 62.5, expected at 72.2, with a previous value of 69.6; the expectations index had a preliminary value of 67.6, dropping to the lowest level this year, expected at 72, with a previous value of 68.8.

In the aspect of inflation expectations that the market is closely watching, the University of Michigan's 1-year inflation expectation in the United States in June had a preliminary value of 3.3%, expected at 3.2%, with a previous value in May at 3.3%; the 5-year inflation expectation had a preliminary value of 3.1%, expected at 3%, with a previous value in May at 3%.

Consumers' assessment of their current personal financial situation dropped by 12 points to 79, the lowest level since October last year, reflecting concerns about income. People's views on the economic situation have dropped to the lowest level since the end of 2022.

The University of Michigan's report also showed that the measure of durable goods purchase conditions dropped to the lowest level since December 2022.

Analysts say that the decline in US consumer sentiment coincides with signs of a weak labor market, which has been driving consumer spending over the past year. US non-farm employment data shows that the unemployment rate rose to 4% last month, the highest level in over two years.

Joanne Hsu, the director of the University of Michigan Consumer Confidence Survey, stated in a declaration:

While low-income households as a group have seen significant wage growth in a strong labor market environment, their budgets remain tight even as inflation slows down, with prices remaining high.

The views of middle-income consumers are similar to those of low-income consumers, which is different from historical patterns where their views typically fall between high-income and low-income consumers.

Consumer confidence affects economic growth in the coming months. Pessimistic consumer sentiment will suppress spending levels, thereby affecting economic recovery, while optimistic consumer sentiment will help the future economy

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