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First Cut: Final Consumer Sentiment Index for June revised up a tad and still elevated, but consumers less confident than in May

The final University of Michigan Consumer Sentiment Index was revised up to 98.2 in June (previously 97.9), but is down from the 100.0 in May.

There was a downward revision to the reading for current conditions in June to 111.9 (previously 112.5). Although this is a tad higher than the 110.0 in May, consumers are clearly less optimistic in the past few months in regard to the labor market, although buying conditions are more favorable for some big purchases like housing and motor vehicles.

The six-month expectations index was revised up to 89.3 in June (previously 88.6), but remained below the 93.5 in May. Uncertainties about trade and tariff policy are weighing heavily and reducing confidence that the economy will produce good outcomes for consumers. This component accounts for about 60% of the total.

Inflation expectations were revised up a tick for June. The final 1-year measure was 2.7% (previously 2.6%), which was lower than the 2.9% in May but still pointing to modest upward pressure on prices in the near term. The final 5-year measure was 2.3% (previously a series low of 2.2%) and back at the low end of the current range of expectations for the medium term. The upward revision isn’t enough to calm calls for the Fed to defend the credibility of its 2% inflation objective with a rate cut, but it also gives the FOMC a less reason for alarm that inflation expectations are coming unanchored.

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