Less enthusiasm about prospects for the U.S. economy and personal finances sent consumer sentiment to a nine-month low in July, survey data from the University of Michigan showed July 28.
Highlights of July Michigan Sentiment
• Sentiment index dropped to 93.4 (est. 93.2) from 95.1 in June; preliminary reading was 93.1.
• Expectations measure fell to 80.5 in July from 83.9 the prior month; preliminary reading was 80.2.
• Current conditions gauge, which measures Americans’ perceptions of their personal finances, advanced to a 12-year high of 113.4 from 112.5 in the prior month; preliminary reading was 113.2.
While 51% — matching the largest share since November 2000 — of consumers indicated that their finances had improved recently, households were wary about their prospects. The proportion that anticipated financial gains in the coming year dropped to 34% in July from 42% a month earlier.
The decline in financial prospects was mostly among lower- and middle-income Americans. What’s more, 28% of respondents said they expected the economy to improve in the year ahead, down from 42% just three months ago.
The drop in the main gauge of sentiment shows confidence is the lowest since President Donald Trump was elected. The decrease in expectations was concentrated among Republicans, underscoring the frustrations voters have with lawmakers in Washington and the uphill path for any policies that would help propel the economy.
“Long-term prospects for the economy were still dominated by partisanship, as 70% of Republicans expect a continuous expansion and 66% of Democrats expect a renewed downturn sometime in the next five years,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.
“Unemployment, a top concern of consumers, was expected to fall from its current low level by 52% of Republicans, and to increase by 43% of Democrats,” Curtin said.
• Favorable car-buying attitudes fell to a six-month low; among those with incomes in the top third and who account for majority of auto purchases, sentiment was the weakest in three years.
• Consumers saw inflation rate in the next year at 2.6%, unchanged from two prior months.
• Inflation rate over next five to 10 years also seen at 2.6% after 2.5% in June.
With assistance by Kristy Scheuble