Consumer confidence remained elevated this month, according to new data from the University of Michigan. Specifically, the headline sentiment gauge held at 98.8 in the first half of May, in line with estimates and matching one of the highest readings of the current business cycle. Under the hood, views of present economic conditions deteriorated slightly while outlooks on the future improved, although both changes were statistically insignificant.
More importantly, Americans appear to be noticing the recent uptick in U.S. inflation, as surveyed consumers expect household prices to rise 2.8 percent over the next twelve months. That matches the highest reading of the past few years, although longer-term (5-year) inflation expectations have held steady at 2.5 percent for five months in a row. At the same time, 80 percent of respondents anticipate higher interest rates in the year ahead, and optimism about income growth and the overall labor market cooled slightly in May. Survey of Consumers chief economist Richard Curtin, though, still believes that “overall, the data are consistent with a growth rate of 2.7% in real personal consumption from the second half of 2018 to first half of 2019.”
Sources: University of MichiganPost author: Charles Couch