After May’s extremely modest rebound in sentiment, UMich preliminary June survey was expected to show a continued bounce and even a pick up in hope (which fell further in May) and it did, even more than expected.
The headline sentiment index increased 6.6 points to 78.9 (the biggest jump since June 2016) as the gauge of current conditions advanced 5.5 points to 87.8 this month, while a measure of expectations jumped 7.2 points to 73.1.
The turnaround is largely due to renewed gains in employment, with more consumers expecting declines in the jobless rate than at any other time in the long history of the Michigan surveys.
Buying Conditions continue to pick up with the highest level for car-buying in two years…
But, inflation expectations slipped after soaring last month…
Richard Curtin, director of the survey, said in a statement:
“It is likely that the recent rise in inflation expectations reflects a shift in consumer purchases from the full range included in the CPI to be more heavily focused on food purchases, which posted an annual gain of 4.8% in May,’’ Curtin said.
Somewhat interestingly, Curtin poured cold water on the rebound:
“Despite the expected economic gains, few consumers anticipate the reestablishment of favorable economic conditions anytime soon.”
Despite the share of respondents who reported they expect their finances to improve in the next year rose to 42% from 32%, but we note that income uncertainty hovers near a record low…
And it’s pretty clear which ‘cohort’ of the American public that refuses to embrace the bounce – Sentiment among Republicans spiked from 90.5 to 101.5, among Independents it jumped from 70.7 to 77.9, but for Democrats it barely increased from 56.4 to 57.1…
Somewhat shockingly, despite reopenings, handouts, rehirings, and a soaring stock market, Democrats actually see current conditions worse in June than in May..
Confidence in government economic policies fell in early June, with the proportion judging policies as poor at the highest level since Trump was elected.