Consumer Sentiment Falls More Than Expected in June: Survey of Consumers

The Survey of Consumers, a closely-watched gauge of consumer sentiment from the University of Michigan came in at 93.5 in June from an initial reading of 94.3. May’s reading was 94.7 and economists anticipated a reading of 94.0 for the month.

Consumers were a bit less optimistic in late June due to rising concerns about prospects for the national economy,” Surveys of Consumers chief economist, Richard Curtin said. “While no recession is anticipated, consumers increasingly expect a slower pace of economic growth in the year ahead.”

More from Mr. Curtain:

Importantly, the persistent strength in personal finances will keep the level of consumer spending at relatively high levels and continue to support an uninterrupted economic expansion. Over the past 18 months, the Sentiment Index has shown only minor fluctuations about a very positive trend, with the June 2016 level a bit higher than the overall average (93.5 vs. 92.6).

This relative stability stands in sharp contrast to the much more volatile path of GDP. The stability in the overall Sentiment Index reflects a gradual improvement in assessments of current conditions being offset by a downward drift in the economic prospects. The Current Conditions Index reached in the June survey its highest level since January of 2007, while the Expectations Index declined a modest 9.5% from its January 2015 peak. Although the data are consistent with GDP growth falling slightly below 2.0% in 2016, real consumer spending can be expected to rise by 2.5% in 2016 and 2.7% in 2017.