UMich Inflation Expectations Unexpectedly Rebounded In July; Democrats' Confidence At 2-Year Highs

The once-must-watch inflation expectation signal from UMich's sentiment survey unexpectedly rebounded higher in preliminary July data - with expectations for the next year up from 3.3% to 3.4% (notably above the expected drop to 3.1%). Expectations for longer-term inflation also rise...

Source: Bloomberg

Headline confidence was expected to rise in the preliminary July data and it did bigly... Sentiment rose to its highest since Sept 2021 at 72.6 with both current and expectations indices soaring...

Source: Bloomberg

“The sharp rise in sentiment was largely attributable to the continued slowdown in inflation along with stability in labor markets,” Joanne Hsu, director of the survey, said in a statement.

Buying Conditions surged for durable goods and increased for houses...

Source: Bloomberg

High prices have been most challenging for lower-income households. Hsu said that sentiment improved for all groups except lower-income consumers.

Sentiment for Democrats and Independents soared in preliminary July data, Republican confidence rose only modestly...

Source: Bloomberg

Confidence is likely correlated to the surge in stocks but the rebound in inflation does not fit with the CPI narrative.