U.S. consumer sentiment worse than initially estimated in June

The final reading for the June Reuters/Michigan index of consumer sentiment came in at 85.5 compared to a preliminary reading of 86.4 and the May final reading of 82.9. 

Economists had forecast the index to be upwardly revised to 86.5.

According to the report, the index of consumer expectations rose 6.0 percent m-o-m to 83.5 from May’s final reading of 78.8, while the index of the current economic conditions edged down 0.9 percent m-o-m to 88.6 from May’s final reading of 89.4.

“Although consumer sentiment slipped in late June, it still remained 3.1% above the May reading, and the second highest since the start of the pandemic,” noted Richard Curtin, Surveys of Consumers chief economist. “Consumers continued to pay close attention to three critical factors: inflation, unemployment, and interest rates. Not only did year-ahead inflation expectations fall slightly to 4.2% in June from May's decade peak of 4.6%, consumers also believed that the price surges will mostly be temporary. Declines in unemployment rate in the year ahead were expected by 56% of consumers, the largest proportion ever recorded in the history of the surveys. The growing strength in the economy meant that nearly three-quarters of all consumers expected rising interest rates during the year ahead, the highest proportion since 2018 when the economy was near its last peak.”