The University of Michigan’s Consumer Sentiment Index dropped 1.1 points in late June to 98.2. Analysts at Wells Fargo, point out that while sentiment is still slightly higher than it was in May, the drop in late June likely reflects growing concerns about global trade.
Key Quotes:
“Consumer sentiment fell 1.1 points in late June to 98.2. The drop likely reflects growing concerns about tariffs that are set to take effect in early July. The simmering trade dispute has contributed to the recent volatility in the stock market, which tends to influence consumer sentiment a little more heavily than it does consumer confidence.”
“While growth almost certainly cranked up in Q2, so did financial market volatility. Concerns about how tariffs will impact global trade and global economic growth have begun to make their way into the financial markets.”
“June’s drop in expectations is still relatively small, however, and expectations remain at a fairly lofty level. Moreover, the drop in expectations appears to be from a small increase in the proportion of consumers expecting conditions to worsen.”
“Expectations for inflation over the next five years also ticked up slightly but remain well contained at just 2.6 percent. “
“Altogether there were few major surprises in the consumer sentiment data. Consumers are concerned about tariffs and rising gasoline prices, but not enough to sway them from shopping, traveling or dining.”
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