Consumer sentiment declines in June
Tariff concerns are weighing on American consumers.
The University of Michigan’s consumer-sentiment fell to 97.9 in June from 100 in May. Economists had expected a reading of 99.
“Some of the decline was due to expected tariffs on Mexican imports, which may be reversed in late June, but most of the concern was with the 25% tariffs on nearly half of all Chinese imports,” said Richard Curtin, chief economist, surveys of consumers, University of Michigan. “Consumers responded by lowering growth prospects for the national economy, and as a consequence, reduced the expected gains in employment.”
The only component of the sentiment index that improved in early June was buying plans for large household durables.But the improvement was due to consumers favoring tariff induced buy-in-advance price rationales. Negative mentions of tariffs were spontaneously made by 40% of all consumers in early June, up from 21% in May and the prior high of 35% in July 2018.
Consumers anticipated an average long-term inflation rate of just 2.2%, the lowest rate the surveys have recorded since the question was introduced 40 years ago. The University of Michigan said, overall, the data indicate that real personal consumption expenditures will rise by 2.5% in the year ahead.
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