Consumer sentiment weakened less than previously thought in June, suggesting U.S. consumers will continue to be a pillar of strength for the economy.
The University of Michigan’s consumer sentiment index declined to 98.2 from May’s score of 100. That was higher than the preliminary estimate of 97.9 and higher than the consensus forecast of economists, who expected consumer sentiment to remain unchanged from the preliminary reading.
The decline was due to wealthier households losing some of their confidence due to tariffs, according to the survey’s chief economist Richard Curtin.
“June’s small overall decline was entirely due to households with incomes in the top third of the distribution, who more frequently mentioned the negative impact of tariffs, cited by 45%, up from 30% last month,” Curtin said. “While more negative trade news will act to decrease consumer spending, the persistent overall strength in consumer confidence is still consistent with growth of real personal consumption expenditures by 2.5% during the next twelve months.”
Expectations for the Fed to hike interest rates fell to their lowest in six years.
Consumer sentiment about current conditions improved from May to June but remain below last year’s buoyant levels. The expectation component declined but is significantly higher than it was last year. The combined reading suggests that consumers feel good about the economy now and are less worried about the future than they were a year ago.