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University of Michigan sentiment dips as inflation concerns lift expectations
The index fell to 51 in August from 55.2 in July, while one-year inflation expectations rose to 4.3% from 4.2%.
U.S. consumers grew more pessimistic about the economy in August, according to a preliminary University of Michigan sentiment reading cited by Yahoo Finance. The University of Michigan Index of Consumer Sentiment declined to 51 from July’s 55.2, finishing well below economists’ expectations of 55.
Yahoo Finance reports that the drop was broad based, with larger declines among older consumers, lower-income consumers, and those without a college degree. The survey director, Joanne Hsu, said those groups are more vulnerable to any erosion of purchasing power tied to inflation.
Alongside weaker sentiment, consumers’ inflation outlook worsened. Yahoo Finance notes that one-year inflation expectations rose to 4.3% from 4.2% in July, while 5-to-10-year price expectations stayed flat at 3.3%, and only 8% of consumers expect income growth to outpace inflation over the next year.
The report also points to recent inflation data that still left uncertainty in markets. According to Yahoo Finance, the Consumer Price Index rose 3.4% year over year in July, and the Producer Price Index excluding food, energy, and trade services increased 4.7% versus expectations of 4.6%.