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Consumer Sentiment Ticks Lower in July

Consumer Sentiment got worse over the course of July rather than improved. The University of Michigan’s Consumer Sentiment report was initially shown to be 93.3 in mid-July, but the final July figure ticked down to 93.1 in Friday’s report. Bloomberg was calling for a gain to 94.1, and the lowest expectation from any economist in the Bloomberg group was 93.5.

This almost feels against the grain, with China being less in the news, a resolution in Greece looking more likely, and with a potential Iran pact being signed.

Another stark reminder here comes from the notion that Consumer Sentiment was 96.1 in the month of June and was closer to post-recovery highs.

July’s expectations component dropped down in July to 84.1 from 87.8 in June. This decline is also in line with the earlier Conference Board report on Consumer Confidence.

The current conditions dipped down to 107.2 from the June reading of 108.9. The inflation expectations component ticked up in the one-year outlook to 2.8 percent, and 2.8% for the five-year outlook.

The Conference Board report on Consumer Confidence, which is from 3,000 households, showed the following earlier this week: The Index fell a sharp 9 points to a reading of 90.9, down from 99.8 in June. The reading compared to Bloomberg’s consensus estimate of 99.6 and its prior reading was 101.4 for June. Economists were shown to have a range of 97 to 102 for this report.

With this survey being from only 500 households, one has to wonder how insightful the consumer expectations are on inflation. That seems to have magically been in the 2% or 3% range for years, mainly because that is what everyone has been taught is a norm through time.

By Jon C. Ogg