Consumer Sentiment at Lowest Level of the Year

Earlier today, Thomson Reuters and the University of Michigan reported that consumer sentiment experienced its sharpest decline in 10 months, falling from 79.3 in May to 74.1 in the first of two readings for June, as a weakening labor market and concern over financial markets both in the U.S. and abroad appear to be weighing on Americans.

This marks a sharp reversal to what was the highest reading on consumer sentiment since October of 2007 as shown below and follows a plunge in the other major survey on the mood of the consumer, the Conference Board’s consumer confidence index, reported earlier in the month.

The current conditions index fell from 87.2 in May to 82.1 in June and the expectations index fell about an equal amount, from 74.3 to 68.9, both now at their lowest levels of the year.

Despite falling gasoline prices, one-year inflation expectations were unchanged at 3.0 percent and the five-year outlook for consumer prices shows inflation at 2.9 percent, up 0.2 percent from last month.