US Consumer Morale Dips More Than Expected In July: Sentiment 'Remains Stubbornly Subdued'

Preliminary estimates from the University of Michigan revealed that U.S. consumer confidence has declined more rapidly than anticipated in July, hitting its lowest level since November 2023.

The survey also indicated that inflation expectations have slightly eased, implying that the drop in consumer sentiment is beginning to impact demand and exert downward pressure on prices.

University Of Michigan July Consumer Sentiment Report: Key Highlights

• The University of Michigan consumer sentiment index fell from 68.2 in June to 66, missing economist estimates – as tracked by TradingEconomics – of 68.
• The sub-index for consumer expectations eased from 69.6 to 67.2, below the expected 69.8.
• The sub-index for current conditions fell from 65.9 to 64.1, below the predicted 66.3.
• The year-ahead inflation expectations decreased from 3% to 2.9%, as expected. Long-term inflation expectations edged lower from 3% to 2.9%, below the expected 3%.

Economist Takeaways

"Although sentiment is more than 30% above the trough from June 2022, it remains stubbornly subdued. Nearly half of consumers still object to the impact of high prices, even as they expect inflation to continue moderating in the years ahead," said the University of Michigan's Surveys of Consumers Director Joanne Hsu.

Consumers sense significant uncertainty regarding the economy’s direction, although there is little evidence to suggest the first presidential debate influenced their economic perspectives, she said.

Market Reactions

Wall Street hovered in the green Friday, with all major indices showing gains by 10:10 a.m. in New York.

The S&P 500, as tracked by the SPDR S&P 500 ETF Trust SPY was 0.6% higher, while small caps, monitored through the iShares Russell 2000 ETF IWM, outperformed larger caps, up 1.5%.

Sector-wise, tech rebounded after Thursday’s sell off, with the Technology Select Sector SDPR Fund XLE up almost 1%.

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