Consumer sentiment is at its lowest level since last year
6 hours and 20 minutes ago
Consumers feel good about inflation, but low-income earners worry the economy is changing, a national survey of people’s views on the economy shows.
The Michigan Consumer Sentiment Index continued to decline in July. That was the lowest since November 2023, marking four consecutive months of declines in the widely followed measure.
However, consumer sentiment has remained „virtually unchanged” over the past three months, survey director Joan Hsu said.
„Sentiment is up 33% from the June 2022 historic low, but remains guarded as higher prices continue to drag on sentiment, especially for lower-income earners,” Hsu wrote. „Labor market expectations remain relatively stable, providing continued support for consumer spending.”
The report highlights the disparities between high and low income earners, wrote Oren Klachin, financial market economist at Nationwide.
„In short, high-income earners are generally excited, while low-income counterparts feel the heat,” Klachin wrote. „Low-income households will suffer the greatest pain during the coming recession because they have not benefited from the run-up in stock prices and home values to offset the pending slowdown in income growth.”
— Terry Lane
The Federal Reserve’s preferred inflation gauge cooled in June
10 hours and 16 minutes ago
The Federal Reserve’s preferred rate of inflation cooled slightly in June, paving the way for central bank rate cuts in September.
Personal consumption expenditures (PCE) prices rose 2.5% from a year earlier, down from 2.6% in May, the Bureau of Economic Analysis said. Friday’s June PCE inflation reflected the trend shown by the Consumer Price Index earlier this month.
The PCE measure of inflation is particularly significant because it is the measure central bankers place the most stake in when setting the nation’s monetary policy. The central bank has kept its influential Fed funds rate at a 23-year high since last July in an effort to reduce inflation to its 2% annual target.
Economists and traders widely doubt the central bank will leave its key inflation rate at its current level in July and cut it in September.