US consumer continues to exude confidence in July, University of Michigan says

Americans continued to exude confidence last month with confidence in the outlook for their personal finances still near multi-decade highs, the results of a closely-followed survey revealed.

But faced with "policy uncertainties", consumers had begun to take precautionary measures - despite falling interest rates - economists said.

The final reading on the University of Michigan's consumer confidence index for the month of July printed at 98.4, which was unchanged from the preliminary reading and only marginally below economists' forecasts (consensus: 98.5).

Survey director, Richard Curtin, highlighted the "remarkable" stability of consumer confidence since the beginning of 2017 "despite the ongoing trade uncertainties".

He credited a "renewed" sense of personal financial optimism for that; indeed, Americans confidence in the outlook for their personal finances remained near its strongest levels since 1963, according to the university.

"Positive job and income prospects, gains in net household wealth, and low inflation have bolstered optimism. At present, consumers do not anticipate a rapid acceleration in income growth rates, nor do they expect significant changes in inflation and unemployment rates," said Curtin.

However, consumers were not blind to the "mounting policy uncertainties" and had been raising their savings and cutting debt.

Favourable buying attitudes towards buying homes and vehicles had also "significantly receded from their cyclical peaks", he said.

Would the just announced tariffs on Chinese exports, including on more commonly purchased consumer items trigger further caution?

That was now a key question, Curtin said.

"Aside from its direct impact on spending, the much more important issue is how much it lessens overall consumer confidence."

In June, the headline confidence index had come in at 98.2.

Inflation expectations one-year ahead meanwhile declined from 2.7% for June to 2.6% in July, while looking five years ahead they rose from 2.3% to 2.5%, with the latter having moved back towards the top of their range for over the past 12 months.