July's Consumer Sentiment is Highest Reading Since October 2021
Ann Arbor, MI, July 28, 2023-Consumer sentiment rose for the second straight month in July 2023, soaring 11% above June and reaching its most favorable reading since October 2021, according to early results from the University of Michigan’s Survey of Consumers.
All components of the index improved considerably, led by a 18% surge in long-term business conditions and 14% increase in short-run business conditions.
Overall, the sharp rise in sentiment was largely attributable to the continued slowdown in inflation along with stability in labor markets, according to a release. It notes that sentiment for lower-income consumers fell as that group anticipates that inflation and their income prospects will both worsen in the year ahead, highlighting the heterogeneity of views across the population.
Year-ahead inflation expectations were little changed, inching up from 3.3% in June to 3.4% in July. The current reading is well below the high point of 5.4% from April 2022 but remains above the 2.3-3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations were unchanged from June at 3.0%, again staying within the narrow 2.9-3.1% range for 23 of the last 24 months, the survey reports.