Consumer sentiment in the United States experienced an unexpected decline in July, according to preliminary data released by the University of Michigan on Friday.
The report revealed that the consumer sentiment index decreased to 66.0 in July from 68.2 in June. This decline was contrary to economists' expectations, who had predicted a slight increase to 68.5.
This unexpected drop brings the consumer sentiment index to its lowest point since it registered 61.3 in November 2023.
"Although sentiment is more than 30% above the June 2022 low, it remains persistently subdued," noted Joanne Hsu, Director of Surveys of Consumers. "Nearly half of consumers still express concerns about the impact of high prices, even as they anticipate inflation to moderate in the coming years."
Hsu further commented, "With the upcoming election, consumers are perceiving significant uncertainty about the economic outlook, although there is little indication that the first presidential debate has altered their economic views."
The University of Michigan's data also showed that the index of current economic conditions slightly fell to 64.1 in July from 65.9 in June, while the index of consumer expectations declined to 67.2 in July from 69.6 in June.
Additionally, the report indicated that year-ahead inflation expectations fell for the second consecutive month, slipping to 2.9 percent in July from 3.0 percent in June.
Long-term inflation expectations also decreased to 2.9 percent in July from 3.0 percent in June but remain somewhat elevated compared to the 2.2-2.6 percent range observed in the two years preceding the pandemic.
