There were two important reports on the U.S. economy released this morning. First, consumer confidence firmed this month, according to new data from the University of Michigan. Specifically, the headline sentiment gauge rose to 99.3 in the first half of June, better than expected and the highest reading since March. Under the hood, views of present economic conditions improved considerably this month, while outlooks on the future deteriorated slightly. The latter may be partially related to growing concerns about rising prices, as surveyed consumers’ expectations for both near- and medium-term inflation rose in June. Survey of Consumers chief economist Richard Curtin, though, stressed that “only when inflation and interest rates are expected to persistently exceed income and job prospects will consumers begin to curtail their discretionary spending.”
Elsewhere, total industrial production in America fell last month by 0.1 percent, according to a new report from the Federal Reserve Board of Governors. That was worse than the 0.1 percent gain economists expected and the first monthly decline since January. However, much of the weakness last month was due to a sharp 0.7 percent drop in manufacturing, which accounts for roughly 75 percent of all industrial production in this country and was under pressure, according to the report, because of truck assemblies being “disrupted by a major fire at a parts supplier.” Further, the April industrial production gain was revised higher and year-over-year growth remained positive for the 15th month in a row. As for capacity utilization, this leading indicator of inflation and potential output slid to 77.9 percent in May, below estimates but still one of the best readings of the past few years.
Sources: Econoday, UoM, FRBG, FRBSLPost author: Charles Couch