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The University of Michigan released today its consumer confidence report showing a decline in the index in July to 97.9 but confidence improved from June. Analysts at Wells Fargo, point out that the recovery in the index likely reflected the recent improvement in the stock market.

Key Quotes:  

“Consumer sentiment fell 0.3 points in July, largely due to growing concerns about the potential impact that tariffs might have on the economy. The University of Michigan tallies unsolicited comments about the economic outlook from consumers along with their regular data collection. Overall dissatisfaction with government policy has reached the highest level since the 2013 government shutdown, largely reflecting fears about how the simmering trade dispute might impact the economy.”

“While consumers are showing at least a twinge of caution about tariffs, they still feel fairly confident about the economy in general.”

“Expectations for future economic conditions rose 1.0 point to 87.3. Consumers are generally upbeat about employment and income growth over the coming year, with consumers expecting more jobs to be created over the next year and for incomes to increase.”

“Almost all of the drop came from a rise in the proportion of consumers that stated they expected business conditions to worsen over the next year, which now slightly exceeds the proportion expecting conditions to improve.”

“While near-term median expectations for inflation have fallen to 2.9 percent, long-term inflation expectations remain well anchored around 2.4 percent.”