Consumer sentiment remained deep in the doldrums in July as inflation further eroded purchasing power and left families scrambling to make ends meet.
The University of Michigan said its final consumer sentiment index score for July edged up slightly to 51.5 from 50.0 in June. It is down 36.6 percent over the course of the year.
The indicator of current conditions improved from 53.8 in June to 58.1 in July. This is still 31.2 percent below last year’s level. It’s likely this was boosted by a steep decline in gasoline prices, which fell from $4.87 a month ago to $4.25 today.
Consumers’ outlook, however, worsened. The barometer of expectations edged down to 47.3 from 47.5 a month ago. This measure is off by just over 40 percent compared with the year ago level.
Despite the improvement in July, the index level is near the worst level ever recorded and is at the second lowest ever.
Joanne Hsu, the director of the survey, said “concerns over global factors have eased somewhat. This easing provided some limited support to buying conditions for durables, which remained near the all-time low reached last month, as well as a modest retreat in long run inflation expectations.”
The final July reading of the median expected year-ahead inflation rate was 5.2 percent, where it had been for the proceeding two months. Long run expectations dipped to 2.9 percent from 3.0 percent, but remained within the elevated 2.9-3.1 percent range seen in the past 11 months.
Hsu said expectations for the labor market have also softened, likely reflecting an uptick in jobless claims in recent months and the expectation that the Federal Reserve’s rate hikes will quell demand for labor.
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