The biggest drop in U.S. consumer sentiment since October represents a break from the greater optimism seen after the presidential election, University of Michigan survey data showed Friday.
Highlights of Michigan Sentiment (June, Preliminary)
- Preliminary sentiment index fell 2.6 points to 94.5 (forecast was 97), lowest since November
- Expectations measure decreased to 84.7, lowest since October, in June from 87.7
- Current conditions gauge, which measures Americans’ perceptions of their personal finances, dropped to 109.6 from 111.7
The slide in confidence reflects concerns about President Donald Trump's economic policies and their chances of passing through Congress. Responses since June 8, the date of former FBI Director James Comey's congressional testimony, show even greater declines, although few respondents referred to the event when explaining their views. Even so, that trend suggests the final number for June may be lower when it's reported in two weeks.
The report shows some signs of eroding economic optimism, as for the first time since October, more consumers expected a recession in the next five years, than those who saw an uninterrupted expansion. Democrats remain markedly more pessimistic than Republicans about the economy. Still, overall confidence remains higher than last year's average amid a strong labor market and increased household income.
“The recent erosion of confidence was due to more negative perceptions of the proposed economic policies among Democrats and the reduced likelihood of passage of these policies among Republicans,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.
- 80 percent of Democrats reported hearing of negative economic developments while 83 percent of Republicans reported positive ones
- Share of respondents who expect financial gains in year ahead was 42 percent, the highest in a dozen years
- Consumers saw inflation rate in the next year at 2.6 percent, unchanged from the prior month
- Inflation rate over next five to 10 years seen at 2.6 percent after 2.4 percent in May
- Household buying plans had mixed results, with small declines in durables offset by small increases in vehicles
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