While Americans feel a little better about the economy, but Painfully high inflation It still keeps consumer confidence near an all-time low, according to preliminary survey data from the University of Michigan.
The data shows that the preliminary index of university surveys of consumers rose to 51.1 in July from a record low of 50 in June.
“The share of consumers who blame inflation for eroding their living standards has continued to rise to 49%, matching an all-time high during the Great Recession,” said Joan Hsu, director of consumer surveys. These negative opinions persisted in the face of the recent moderation in pump gas prices.
The survey also showed that expectations for long-term inflation continue to improve. The median forecast for inflation levels five years from now has fallen to 2.8%, which is down from the 2.9% to 3.1% range seen over the past 11 months.
The consumer sentiment data comes on the heels of new retail sales figures, which showed a slight dip in spending as Americans battle rising prices on everything from cookies to clothing. Economists and policy makers are watching closely for any significant decline in US consumer spending, which drives nearly two-thirds of the economy.
The data revealed that retail sales grew 1% in June from May to $680.6 billion, and rose 8.4% from June 2021, according to data released by the US Census Bureau.
However, since retail sales numbers are not adjusted for inflation, the higher number is likely to reflect higher prices rather than increased spending. The inflation rate, according to the Consumer Price Index, rose by 1.3% during the past month, and rose by 9.1% from last June.
Some of the biggest year-over-year sales gains were at gas stations, which rose 49.1%. The prices of various retail stores increased by 15.1%, and the prices of food and beverage services increased by 13.4%. Sales in electronics and home appliances stores declined by 9.1%, reflecting the continuing trend of consumers shunning expensive goods in exchange for service-related spending.
While some analysts and economists previously expected the Fed to raise the benchmark lending rate by another 75 basis points when it meets at the end of the month to discuss monetary policy, the latest batch of strong economic data has made markets brace for more aggressive action from the Fed — including That’s a potential 100 basis point rate hike – to cool consumer demand.
In a recent speech, Federal Reserve Governor Christopher Waller indicated that he supports another increase of 75 basis points. However, he said he would consider going even higher if the retail and home sales data came in higher than expected.
Rhett Bank’s chief industry analyst, Ted Rossman, said retail activity in June could be hot enough to support this massive rally.
“The fact that retail sales are more or less dealing with water at a time when inflation is high, and people are spending more of their discretionary money on travel and dining out, I think there is a potential reading of this that will encourage the Fed to go big,” he added. .