Consumer Sentiment Hits Low for 2024
The latest University of Michigan consumer sentiment survey showed sentiment hit its lowest level in seven months during June. The index reading for the month came in at 65.6, down from 69.1 in May and lower than expected. "Assessments of personal finances dipped due to modestly rising concerns over high prices as well as weakening incomes," Survey of Consumers director Joanne Hsu said in a statement. "Overall, consumers perceive few changes in the economy from May." The current conditions index fell from to 62.5 from 69.6 the month prior, contributing to the decline in June's headline index. Capital Economics North America economist Olivia Cross said Friday's reading shows "households are now struggling more under the weight of higher interest rates and still-elevated consumer prices." Year-ahead inflation expectations were flat at 3.3% from the month prior. Headline CPI rose 3.3% over the prior year in May, the lowest monthly headline reading since July 2022. Broadly, the decline in the index represents a continued trend among consumers who are fed up with higher prices regardless of whether inflation is cooling and the labor market remains on solid footing. "People experience what they experience," Powell said. "All I can tell you is what the data show, which is, we've got an economy that's growing at a solid pace. We've got a very strong labor market with unemployment at 4%. It's been a long time since we've had, you know, a long stretch of time with unemployment at or below 4%, very long time." Powell maintained that the Fed is confident inflation will return to its 2% target. "In the meantime, you know, it's going to be painful for people," Powell said. "But the ultimate pain would be ... a long period of high inflation."
