US inflation expectations ease a tad in July, University of Michigan says

The University of Michigan's consumer confidence index for the month of July dipped from May's reading of 68.2 to 66.0 for June.

Economists had pencilled in a slight rise to 68.5.

The survey's director, Joanne Hsu, said that while the index was 30% above its June 2022 trough, it remained "stubbornly subdued".

Americans continued to complain about high prices, despite still expecting that they would moderate further in coming years.

Regarding the November elections, she said: "With the upcoming election, consumers perceived substantial uncertainty in the trajectory of the economy, though there is little evidence that the first presidential debate altered their economic views."

A sub-index linked to inflation expectations one year ahead slipped again, to 2.9%, versus a range of 2.3-2.9% over the two years prior to the pandemic.

Another sub-index tracking long-run inflation expectations also fell back to 2.9%, but remained above their pre-pandemic range of 2.2-2.6%.

According to Thomas Ryan at Capital Economics, the decline in one-year price expectations should not be a concern as they were at 4.5% near the end of 2023, while five-year expectations were now just above their post-2000 average of 2.8%.

Ryan went on to add that: "Although the link between confidence and consumption has been loose in recent years, the weak level of sentiment raises the risk that consumption growth will remain muted, after what appears to have been a soft first half of the year."