U.S. Consumer Confidence Rises 1.8% in July, Inflation Expectations Fall to 4.4%

In early July, the U.S. consumer confidence index reached a five-month high, reflecting improved economic and inflation expectations. The preliminary consumer confidence index for July, as reported by the University of Michigan, increased from 60.7 in the previous month to 61.8. Despite this rise, the index remains below the levels seen throughout the previous year.

Consumers anticipate an annualized inflation rate of 4.4% for the next year, a decrease from the 5% predicted last month and the lowest level since February. Additionally, the expected inflation rate for the next 5 to 10 years is projected to be 3.6%, marking the lowest level in five months. However, ongoing concerns about tariffs continue to temper optimism regarding the economic outlook.

Joanne Hsu, the lead researcher of the survey, noted in a press release that while consumer expectations for business conditions, the labor market, and personal income are weaker than a year ago, the two-month rise in confidence suggests that consumers believe the risks of the worst-case scenarios anticipated in April and May have diminished. Nevertheless, Hsu cautioned that any announcement of tariff increases or rising inflation could negatively impact market sentiment.