US Consumer Sentiment Falls To 7-Month Low


The University of Michigan's consumer sentiment for the United States went down to 94.5 in June of 2017 from 97.1 in May and well below market expectations of 97. It is the lowest reading in seven months as both present and future expectations declined, preliminary estimates showed. The recent erosion of confidence was due to more negative perceptions of the proposed economic policies among Democrats and the reduced likelihood of passage of these policies among Republicans.

The barometer for current economic conditions fell to 109.6 from 11.7 and the gauge of future expectations declined to 84.7 from 87.7.

Americans expect the inflation rate to be 2.6 percent next year, the same as in May and 2.6 percent in the next 5 years (2.4 percent in May).

The modest early June drop of 2.6 points in the Sentiment Index masks a much larger decline since June 8th. Prior to that date the Sentiment Index had averaged 97.7, but since June 8th, the Index fell to 86.7, a decline of 11.0 points. While this break corresponds with James Comey's testimony, only a few consumers spontaneously referred to him or his testimony when asked to explain their views. Importantly, the decline was observed across all political parties, but the loss in confidence among self-identified Republicans since June 8th was larger than among Democrats (9.2 vs. 6.8 Index-points), with Independents showing the greatest falloff (11.5 Index-points). The size of the partisan difference between Democrats and Republicans in the Expectations Index, however, was largely unchanged (55.6 Index-points prior to June 8th, and 51.2 after). The recent erosion of confidence was due to more negative perceptions of the proposed economic policies among Democrats and the reduced likelihood of passage of these policies among Republicans. Fortunately, a strong job market, improved household income and wealth have provided a financial buffer against rising uncertainties. Nonetheless, consumers have become less optimistic about the future course of the domestic economy. Even with the expected bounce back in spending in the current quarter, personal consumption is expected to advance by 2.3% for all of 2017.

US Consumer Sentiment Falls To 7-Month Low


University of Michigan | Joana Taborda | joana.taborda@tradingeconomics.com
6/16/2017 2:12:37 PM