US consumer moods deteriorated a third month in early June, the preliminary read on America’s marquee sentiment gauge suggested.
At 65.6, the University of Michigan headline now sits at its lowest levels since November. Consensus expected 72 from the last of this week’s US macro releases.
There are just a few points left from the upturn that accompanied the Fed’s year-end pivot and attendant “everything rally” across financial assets. Consumers were bedeviled early this year by sticky prices and elevated mortgage rates.
Recall that May’s drop on the Michigan index was the largest since the gauge hit a record low in June of 2022, when Jerome Powell upped the ante to 75bps hike increments in the battle to arrest a generational inflation surge.
Americans’ assessments of their personal finances slipped this month “due to modestly rising concerns over high prices as well as weakening incomes,” survey director Joanne Hsu said Friday.
For whatever it’s worth, a Gallup gauge of Americans’ confidence in the economy registered -34 in the latest release. There too, the fillip witnessed from November’s largely gone.
“Americans’ flagging confidence in the national economy is also evident in their continued mentions of the economy and inflation as two of the most important problems facing the US,” Gallup remarked, editorializing around the results. “Immigration also rank[s] at the top of the list.”
The Michigan release was an afterthought in a week dominated by the June FOMC meeting and inflation data, which was favorable. Year-ahead inflation expectations in the poll were unchanged this month at 3.3%, well above the high-end of the range observed in the years leading up to the pandemic. Expectations at the five- to 10-year point were 3.1% in the first read for June, up a tenth from May.
All in all, it was a lackluster read on the American consumer during Q2’s final month. Recall that the headline has seen large revisions this year. The final read for June is due on the 28th.
“[The] macro’s OK, EPS is picking up, why does it feel so bad?” BofA’s Savita Subramanian puzzled, in a recent note. “Strong jobs numbers and continued disinflation in the last few weeks are favorable for equities, but consumers feel worse than aggregated economic numbers suggest based on ‘vibe-cession’ commentary,” she added.
Earlier this week, the New York Fed’s own consumer poll (covering May) showed US households are the most optimistic about equities in three years. The same poll showed the share of respondents who anticipate a similar or better financial situation a year from now hit 78.1%, likewise a three-year high. Suffice to say that optimism didn’t carry over to the Michigan survey.
