Following consumer sentiment rising in June, the latest University of Michigan Consumer Sentiment Index improved further by 9.9% in July, reaching 54.4. However, the indicator declined by 11.8% on an annual basis. The Current Economic Conditions Index rose by 15.1% month-over-month, yet plummeted 19.3% year-over-year to stand at 54.9 in July. Meanwhile, the Index of Consumer Expectations rose 6.5% on a monthly basis but dove 6.4% on a yearly basis to 54.0.
Recent American consumer confidence opinions have also risen, but both sentiment and confidence are currently in large part dependent on the Middle East conflict, which can determine oil prices and impact the economy.
“With the second straight month of 10% jumps, consumer sentiment climbed to its highest reading since February of this year on the basis of easing price pressures at the pump in recent weeks,” noted Surveys of Consumers Director Joanne Hsu. “All five index components improved, led by significant 20% increases in buying conditions for durables as well as year-ahead business conditions.
“This month’s rise in sentiment was pervasive across the population, seen across groups by age, income, wealth and political party. Particularly strong increases were seen among consumers without a bachelor’s degree. However, with prices remaining frustratingly high, consumers are hardly ebullient about the economy; sentiment is down 12% from a year ago. Thus, sentiment’s upward momentum may prove difficult to sustain if recent declines in gas prices continue to reverse course. Interviews for this release spanned June 23 to July 13, with more than 70% completed before the resumption of U.S. strikes against Iran on July 7 and the subsequent increase in gas prices.”
