While the headline sentiment reading from The University of Michigan's survey made all the headlines - hitting a record low in preliminary June data - it was Fed Chair Powell's later reflection on the inflation expectations breakout that has most trader's attention focus in today's final June print.
A silver lining appeared as the 5-10Y inflation expectation dropped from the preliminary 3.3% to 3.1% final...
However, consumers expressed the highest level of uncertainty over long-run inflation since 1991, continuing a sharp increase that began in 2021
Inflation continued to be of paramount concern to consumers; 47% of consumers blamed inflation for eroding their living standards, just one point shy of the all-time high last reached during the Great Recession.
Of course, the headline sentiment reading remains extremely noteworthy. Pump prices are down 10 straight days so some might have expected improvement from the preliminary print... but it didn't, actually worsening to 50.0 from 50.2 - a new all-time low.
Consumers across income, age, education, geographic region, political affiliation, stockholding and homeownership status all posted large declines.
“Overall, the late-June reversion in long run inflation expectations was generated by growth in the share of consumers expecting extremely low inflation in the years ahead,” Joanne Hsu, director of the survey, said in a statement.
“About half of these consumers expressed bleak views about the risks of recession or unemployment during the interviews.”
Buying Conditions remain a total shitshow (but the consumer is strong?)
“About 79% of consumers expected bad times in the year ahead for business conditions, the highest since 2009.”
The wealthiest respondents sentiment puked to a record low...
Finally, we note that all political cohorts are suffering but Democrats saw the largest drop on the month...
Interestingly there is a major divergence of opinion on inflation expectations across political groups...
“Continued pessimism on both personal finances and the economy could dampen consumer spending going forward,” Hsu said.
So, good news - inflation fears ease... even if the consumer is the most pissed off in 40 years.