Consumer sentiment remains basically unchanged from July but remains much higher than a year ago, according to August’s University of Michigan Surveys of Consumers.
The index for consumer sentiment fell a half-percent from July to 71.2, which is 22 percent higher than last July’s reading of 58.2 and 42 percent above the record low set in June 2022. “Consumers perceived few material differences in the economic environment from last month, but they saw substantial improvements relative to just three months ago,” the report stated.
The index for current economic conditions increased 1 percent to 77.4, which is 32 percent above its year-ago reading of 58.6. The index for consumer economic conditions fell 1.5 percent from July to 67.3, which is still 16 percent above its year-ago mark from a year ago.
Year-ahead inflation expectations remained basically unchanged at 3.3 percent, which is still above the 2.3 percent to 3 percent range in the two years leading up to the pandemic. The Federal Open Market Committee raised rates to 5.25 to 5.50 percent in July, its 11th increase in 17 months.
Consumer sentiment was also reflected in the Conference Board’s July Consumer Confidence Index, which increased to 117 from 110.1 in June. The Present Situation Index, which is based on consumers’ assessments of current business and labor market conditions, increased to 160 from 155.3 in June.
“Despite rising inflation rates, consumers are more upbeat, likely reflecting lower inflation and a tight labor market,” the report stated. “Although consumers are less convinced of a recession ahead, we still anticipate one likely before year-end.”