Analysts at Nomura point out that the University of Michigan consumer sentiment index fell to 95.3 in July, below market expectations of 98.0, the lowest level since last September.
Key Quotes
“The current economic conditions index deteriorated notably while consumer expectations remained about the same. The decline in the consumer sentiment measure appears to have been driven mostly by consumers’ assessment of buying conditions in addition to ongoing tariff concerns.”
“The price component of consumer buying plan measures suggest that consumers see rising prices as increasingly negative factors for their purchase plans, in particular for vehicles and home. However, much of the decline was driven by a sharp drop in current sentiment by self-identified Democrats, a trend that could reverse over coming months.”
“With incoming data pointing to continued strength in the labor market, we do not expect a material slowdown in consumer spending in H2 2018. One-year ahead inflation expectations remained at 2.9% and 5-10 year ahead inflation expectations ticked up 0.1pp to 2.5%.”
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