June Consumer Sentiment Down from May but Flat YOY
Ann Arbor, MI, June 28, 2019-Consumer sentiment fell 1.8% to 98.2 in June, according to final results from the University of Michigan Survey of Consumers. This is the same rate as June 2018.
“June's small overall decline was entirely due to households with incomes in the top third of the distribution, who more frequently mentioned the negative impact of tariffs, cited by 45%, up from 30% last month” says Richard Curtin, Survey of Consumers chief economist. “Most of the June slippage was concentrated in prospects for the national economy, with the unemployment rate expected to inch upward instead of drifting downward in the year ahead. Interest rates were anticipated to rise by the fewest respondents in six years, and declines in mortgage rates have begun to have a positive impact on home buying. While more negative trade news will act to decrease consumer spending, the persistent overall strength in consumer confidence is still consistent with growth of real personal consumption expenditures by 2.5% during the next twelve months.
“The U.S. expansion is on the verge of setting a new record. The ten-year expansion from June 2009 to June 2019 has now tied the prior record from March 1991 to March 2001. Next month it will become the longest expansion since the mid-1850s. Of the two components of the Sentiment Index, the cyclical peaks in the Current Conditions Index were nearly identical, but the peaks in the Expectations Index differed significantly (see the Chart). Since it is the Expectations Index, rather than the Current Conditions Index, that is most closely tied to changes in discretionary purchases, it should be no surprise that the annual growth rate in real personal consumption was 2.6% in the past two years, half the 5.2% average from 1998 to 2000.”