Consumer sentiment rebounds in early June
Consumer sentiment in the United States rose in early June as inflation fears moderated and consumers grew more optimistic regarding future economic growth.
The University of Michigan’s preliminary consumer sentiment index increased to 86.4 in the first half of June, up from 82.9 in May. The reading was higher than expected by many economists.
The early June gain was mainly among middle- and upper-income households and for future economic prospects rather than current conditions, according to Richard Curtain, chief economist, surveys of consumers, University of Michigan,
Stronger growth in the national economy was anticipated, with an all-time record number of consumers anticipating a net decline in unemployment. Rising inflation remained a top concern of consumers, although the expected rate of inflation declined in early June.
Consumers' assessment of the current economic conditions inched up to 90.6 in June from 89.4 in May. The index of consumer expectations--which reflects the balance of respondents anticipating improved business conditions in the next six months--rose to 83.8 from 78.8 the previous month.
In the emergence from the pandemic, consumers are temporarily less sensitive to prices due to pent-up demand and record savings as well as improved job and income prospects, Curtain said.
“The acceptance of price increases as due to the pandemic, makes inflationary psychology more likely to gain a foothold if the exit is lengthy,” he added. “While expansive monetary and fiscal policies are still warranted, the accompanying rise in inflation will cause uneven distributional impacts.”
Curtain said the resulting impacts have already been noticed in June among the elderly and lower-income households.
Consumer sentiment in the United States rose in early June as inflation fears moderated and consumers grew more optimistic regarding future economic growth.
The University of Michigan’s preliminary consumer sentiment index increased to 86.4 in the first half of June, up from 82.9 in May. The reading was higher than expected by many economists.
The early June gain was mainly among middle- and upper-income households and for future economic prospects rather than current conditions, according to Richard Curtain, chief economist, surveys of consumers, University of Michigan.
Stronger growth in the national economy was anticipated, with an all-time record number of consumers anticipating a net decline in unemployment. Rising inflation remained a top concern of consumers, although the expected rate of inflation declined in early June.
Consumers' assessment of the current economic conditions inched up to 90.6 in June from 89.4 in May. The index of consumer expectations--which reflects the balance of respondents anticipating improved business conditions in the next six months--rose to 83.8 from 78.8 the previous month.
In the emergence from the pandemic, consumers are temporarily less sensitive to prices due to pent-up demand and record savings as well as improved job and income prospects, Curtain said.
“The acceptance of price increases as due to the pandemic, makes inflationary psychology more likely to gain a foothold if the exit is lengthy,” he added. “While expansive monetary and fiscal policies are still warranted, the accompanying rise in inflation will cause uneven distributional impacts.”
Curtain said the resulting impacts have already been noticed in June among the elderly and lower-income households.