UM consumer sentiment index drops in June

By Xu Jing

CHICAGO, June 24 (Xinhua) -- The Consumer Sentiment Index released Friday by the University of Michigan (UM) Surveys of Consumers fell to 50.0 in the June 2022 survey, down from 58.4 in May and below last June's 85.5.

The Expectations Index fell to 53.8, down from 63.3 in May and below last June's 88.6. The Current Conditions Index fell to 47.5, down from 55.2 in May and below last June's 83.5.

The June consumer sentiment index reading was an all-time low for the survey, comparable to the trough reached during the 1980 recession.

All components of the index fell in June, with the steepest declines in the year-ahead outlook for the economy, down 24 percent from May; and consumers' assessments of their personal financial situation worsened about 20 percent, said UM economist Joanne Hsu, director of the surveys.

Consumers' personal outlook was darkened by widespread concerns over inflation, Hsu said. 47 percent of all households surveyed cited rising prices as the main factor for declining living standards over the past year, a share that has only been exceeded once since 1981 during the Great Recession.

Consumers continued to trace their worries to global factors: 51 percent of consumers spontaneously mentioned supply shortages for the ninth consecutive month, though a falling share mentioned Ukraine or Russia. Half of all consumers mentioned gas prices, compared with 30 percent in May and only 13 percent a year ago. Consumers expected gas prices to continue to rise a median of 25 cents over the next year, more than double the May reading and the second highest since 2015.

Despite these bleak views overall, over half of consumers expect their incomes to grow over the next year, consistent with continued low unemployment and labor market strength.

Consumers under the age of 45 continue to be more upbeat than older consumers, expecting a one-year gain in income of 4.7 percent. But all age groups, including the youngest group, expressed declines in June in how they expect to fare financially in the year ahead. About 53 percent of consumers expected their incomes to be outpaced by prices over the next year.

The Surveys of Consumers is a rotating panel survey based on a nationally representative sample that gives each household in the coterminous United States an equal probability of being selected. Interviews are conducted throughout the month by telephone.

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