Consumer sentiment in the United States has decreased for the third consecutive month in June, according to a preliminary version of the University of Michigan’s consumer sentiment index released on Friday. The index dropped to 65.6 this month from 69.1 in May, indicating that Americans are becoming increasingly pessimistic about their own finances and concerns about ongoing inflation. Although this month’s reading is significantly higher than the low point reached in June 2022, when inflation was at a four-decade high, it is still below levels typically associated with a healthy economy.
Consumers have been generally pessimistic about the economy since the pandemic, especially since inflation spiked in 2021. Despite some improvement last winter and spring, reaching a peak of 79.4 in March, hopes of a more optimistic view were dashed as inflation remained persistently high in the first quarter of this year. While data released this week indicated a substantial cooling in May, with decreases in the cost of gasoline, new cars, and car insurance, consumer spending is closely monitored by the Federal Reserve and economists as it plays a key role in driving economic activity in the U.S.
Although spending was robust in the first quarter of the year, supporting an otherwise slowing economy, it did slow down in April after adjusting for inflation. However, Americans continued to spend on travel, dining out, and entertainment, indicating some level of confidence in the economy despite ongoing inflation concerns. President Joe Biden’s reelection prospects are also being impacted by negative sentiment about the economy. While consumer anxiety over inflation may be easing slightly due to recent data showing a cooling effect on prices
