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US Sentiment Survey Slips for Second Month

Andre Lapaine July 13, 2018

The preliminary reading of the University of Michigan consumer sentiment index for the month of July was released this morning, and it came in below expectations for a second-straight month.

Market expectations were for a hold at around 98.1, the previous month’s level, but the index came in at 97.1 – the weakest level reported since February of this year.

This report comes off the heels of the Fed Chairman Jerome Powell stating yesterday that “the economy is in a good place,” but also warning that an escalation in tariffs between the US and its trading partners could affect that.

Though the report came in lower compared to the past few months, it is still near the prior 12 months’ average of 97.7, so there doesn’t appear to be any immediate cause for concern yet.

The Surveys of Consumers’ Chief Economist Richard Curtin commented, “The continuing strength has been due to favorable job and income prospects. So far, the strength in jobs and incomes has overcome higher inflation and interest rates.”

What may be holding confidence back is the looming uncertainty of the trade tariffs and how they will affect the US economy moving forward.

This morning, the US import price index for June came in at -0.4%. Import prices haven’t seen a decrease since June of 2017, so that result may be partly cyclical, but it is something to keep an eye on moving forwards.

Bottom Line: Though trade tariffs will continue to be at the forefront of people’s minds moving forwards, wage growth and positive income prospects continue to aid the US economy as confidence levels of consumers remain relatively high compared to historical levels.

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