"University of Michigan Consumer Sentiment Reaches 5-Month High Amid Falling Inflation Expectations"

2025-07-19 00:30
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"University of Michigan Consumer Sentiment Reaches 5-Month High Amid Falling Inflation Expectations"

출처: Block Media

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U.S. Consumer Sentiment Sees Modest Uptick in July Amid Lingering Inflation Worries

Consumer sentiment in the United States experienced a slight improvement in July, according to preliminary findings from the University of Michigan. Yet, persistent inflation concerns continue to weigh heavily on household confidence.

Released on July 18, the University of Michigan's preliminary Consumer Sentiment Index (CSI) for July registered at 61.8, edging up from June’s 60.7 reading. This marks the highest level in five months. However, the index remains 16% below December 2024 levels and still trails historical norms.

Inflation Expectations Ease, but Long-Term Concerns Linger

July’s report highlighted a notable decline in consumers' inflation expectations—a promising sign for economic stability. Short-term inflation expectations for the next year fell to 4.4%, a drop from the 5.0% recorded in June, while long-term expectations over the next five years dipped from 4.0% to 3.6%. Both represent the lowest levels reported since February 2025.

Despite this positive momentum, inflation expectations remain elevated compared to December 2024 benchmarks. This reflects consumers' cautious stance, as uncertainties about potential inflationary pressures in the long term persist.

Contrasting Trends: Present Economic Views vs. Future Outlook

A closer examination of the sentiment data uncovers mixed perspectives among consumers. The Current Conditions Index rose to 66.8, reflecting a 3.1% gain over June and a 6.5% increase compared to July of last year. This indicates a gradual improvement in how consumers perceive present economic circumstances.

On the other hand, the Expectations Index, which gauges future economic outlooks, inched up to 58.6 from June’s 58.1. However, this remains 14.8% lower than the 68.8 recorded in the same month a year prior, signaling ongoing unease about future economic prospects.

Joanne Hsu, Director of the University of Michigan’s Surveys of Consumers, stated, “Consumer confidence hinges largely on inflation stability. While policy changes such as recently passed tax and spending measures have been introduced, their impact on sentiment appears minimal thus far.”

Implications for Markets and Federal Reserve Policy

The subdued yet slightly improving sentiment could influence the Federal Reserve's upcoming monetary policy decisions. With inflation expectations now easing, the possibility of an interest rate cut later this year might gain momentum. However, persistently low consumer sentiment suggests recovering confidence may remain a slow and gradual process.

While the Consumer Sentiment Index signals some stabilization, the overall outlook reveals that households continue to approach economic conditions with caution. This hesitancy may dampen hopes for a rapid rebound in consumer-driven spending—a vital driver of the U.S. economy’s growth trajectory.


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