The report prepared by the University of Michigan showed that the Consumer Sentiment Index improved to 97.9 in the final reading of July from 97.1 in the previous reading and surpassed the market expectation of 97.1.
Key quotes from the official publication
- Despite the expectation of higher inflation and higher interest rates during the year ahead, consumers have kept their confidence at high levels due to favorable job and income prospects.
- What is unique about the current situation is the potential impact of tariffs on the domestic economy.
- Concerns about tariffs greatly accelerated in the July survey.
- Across all households, 35% spontaneously mentioned that the tariffs would have a negative economic impact in July, up from 21% in June and 15% in May.
- These negative economic expectations could quickly disappear if the trade issues with Europe are promptly settled and immediately followed by agreements with China, Canada, and Mexico.
- Resolution is critical to forestall decreases in consumer discretionary spending as a precaution against a worsening economy.