US Economy News Today: Consumer Sentiment at Lowest Point Since Last Year

Consumer Sentiment at Lowest Point Since Last Year

Consumers are feeling better about inflation, but low-income earners are concerned the economy is turning, a national survey on public perceptions about the economy showed. 

The Michigan Consumer Sentiment Index continued to tick lower in July. It’s the lowest level since November 2023, reflecting four consecutive months of decline for the widely-followed measurement.

However, survey director Joanne Hsu said consumer sentiment over the last three months has remained “virtually unchanged,” with this month’s decline from last being “statistically insignificant.” 

“Sentiment has lifted 33% above the June 2022 historic low, but it remains guarded as high prices continue to drag down attitudes, particularly for those with lower incomes,” Hsu wrote. “Labor market expectations remain relatively stable, providing continued support to consumer spending.”

The report highlighted the differences between high- and low-income earners, wrote Oren Klachkin, a financial market economist at Nationwide.

“In short, high-income earners are generally enthusiastic while lower-income cohorts are feeling the heat,” Klachkin wrote. “Lower-income households will suffer the greatest pain during the upcoming economic slowdown since they haven’t benefited from the run-up in stock prices and housing values to help them weather the pending slowdown in income growth.”

-Terry Lane

The Federal Reserve's Preferred Measure of Inflation Cooled in June

The Federal Reserve’s favorite measure of inflation cooled slightly in June, paving the way for the central bank to rate cuts, likely in September. 

Personal Consumption Expenditures (PCE) prices rose 2.5% from the year before, down from 2.6% in May, according to the Bureau of Economic Analysis. Friday’s PCE measure of inflation in June mirrors the trend shown by the Consumer Price Index earlier this month.

The PCE measure of inflation is especially significant because it is the measure central bankers put the most stock in when setting the nation’s monetary policy. The Fed has held its influential fed funds rate at a 23-year high since last July in an effort to push inflation down to its 2% annual goal. 

Economists and traders widely suspect the Fed will leave its key inflation rate at its current level in July and cut beginning in September.