US consumer confidence picks up in June, inflation expectations drop, University of Michigan says

Consumer confidence in the US improved a bit in June, alongside a big drop in inflation expectations.

The University of Michigan's consumer confidence index rose from a reading of 59.2 for the month of May to 63.9 in June (consensus: 60.0) - its best reading in four months.

A sub-index tracking consumers' assessments of current economic conditions improved from 64.9 to 68.0.

In parallel, linked to their expectations strengthened from 55.4 to 61.3.

According to Joanne Hsu, that greater optimism reflected lower inflation and policymakers' resolution of the debt ceiling crisis.

For over the short-run, the economic outlook had improved by 28% and by 14% for the long-run.

That left sentiment 28% above its historic low.

Nevertheless, sentiment remained low, and a majority of consumers were still anticipating "difficult" economic times over the year ahead.

Inflation expectations for the year ahead meanwhile plummeted from 4.2% in May to 3.3% in June - the least since March 2021 - reversing April's spike.

Expectations for the long-run on the other hand were steady at 3.0%, albeit still above the 2.2-2.6% range evident before the pandemic.

Commenting on the latest survey figures, Kieran Clancy at Pantheon Macroeconomics said: "In any event, the key number in this report is five-to-10-year inflation expectations, which dipped to 3.0% from 3.1%, following two straight increases.

"That's still too high for comfort for the Fed, who remain on alert to any signs of an emerging wage-price spiral. But the bigger picture is that longer-run inflation expectations have been stuck in a narrow range of 2.7-to-3.1% for well over two years now, and are sensitive to current food and energy inflation, which signal a drop in inflation expectations ahead."