Consumer sentiment declined in June, despite largely resilient growth in the US economy, as rising prices remained a sore point for Americans.
Last University of Michigan Consumer Survey Data released on Friday showed that sentiment reached a seven-month low during June. The index reading for the month came in at 65.6, down from 69.1 in May and below the expectations of 72 economists.
“Personal finance ratings declined due to modestly increased concerns about rising prices as well as weaker income,” Joan Hsu, director of the consumer survey, said in a statement. “Overall, consumers are seeing few changes in the economy compared to May.”
The Current Conditions Index fell from 62.5 to 69.6 in the previous month, contributing to the decline in the headline index for June. Friday’s reading shows that “households are now struggling more under the weight of higher interest rates and still-high consumer prices,” said Olivia Cross, North America economist at Capital Economics.
Inflation expectations for next year were steady at 3.3% compared to the previous month. However, most participants likely did not have enough time to take into account the recent positive inflation readings from May. The interview period for the survey ran from May 22 to June 12.
This means that the last day consumers can provide answers to the survey is the same day the May Consumer Price Index (CPI) was released. The headline CPI rose 3.3% from a year earlier in May, the lowest headline monthly reading since July 2022.
On Thursday, after the survey window closed, the producer price index showed wholesale prices unexpectedly falling from the previous month in May.
“The press release indicated that consumers remain concerned about rising prices, and inflation expectations for next year remained at 3.3%,” Cross wrote in a note on Friday. “This is at odds with price developments for essentials, given that gasoline prices have fallen and we learned this week that the CPI for food at home was unchanged in May.”
Overall, the decline in the index represents a continuing trend among consumers who are tired of rising prices regardless of whether inflation calms down and whether the labor market remains on solid footing.
During a press conference on Wednesday, Federal Reserve Chair Jerome Powell said it’s difficult for anyone to have a definitive answer about the disconnect between Americans’ feelings about the economy and the actual data.
“People experience what they experience,” Powell said. “All I can say is what the data shows, which is that we have an economy that’s growing at a strong pace. We have a very strong job market with an unemployment rate of 4%. It’s been a long time since we’ve been able to do that.” I’ve spent, you know, a long period of time where unemployment was at or below 4%, a very long time.
He added that after a period of high inflation, price increases have declined “significantly,” and the central bank is doing everything it can to restore price stability. Powell emphasized that the Fed is confident that inflation will return to its 2% target.
“In the meantime, you know, it’s going to be painful for people,” Powell said. “But the ultimate pain will be…a long period of high inflation.”
Correction: A previous version of this article misspelled the name Olivia Cross. We apologize for this error.
Josh Schaeffer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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