MSI: Consumer Sentiment Rises on Americans Optimism
US consumer sentiment rose this month amid more-favorable personal finances, while tariffs weighed on Americans’ optimism for the economy and helped boost inflation expectations to a three-year high, according to a University of Michigan report Friday.
|Highlights of Michigan Sentiment (June, Preliminary)|
The report showed a divergence in sentiment about the present and the future, with a near-record number of households mentioning recent income gains and contrasting with a pickup in inflation expectations.
The economic outlook was “much more negative” among respondents who unfavorably mentioned the new tariffs, as The Trump Administration imposed tariffs on metals imports from allies and prepared for levies on $50-B of Chinese imports.
US consumer sentiment remains near the high for this expansion, as a tight labor market and historically low unemployment levels continue to buoy the US economy. That should help drive continued gains in consumer spending, the biggest part of the US economy at about 70%.
Respondents anticipated an annual gain of 2.5% in household incomes, the highest since Y 2008 and up from 1.6% in May, the report showed. Almost all of the June gain came from people in the bottom 67% of incomes, reflecting job gains across the population.
“Consumers see the tariffs negatively affecting business prospects,” the Director of the University of Michigan consumer survey, said on a conference call. “But it did not affect the 5-year business outlook. Only it was concentrated on the one-year business outlook as though consumers expect this kerfuffle about trade to be over shortly and not lead to a long-lasting trade war.”