Consumer Sentiment Sparks in July

Economics Group of Wells Fargo Bank, N.A. Summary Consumer sentiment shot higher in early July, rising at the fastest pace since late 2005 and notching the highest level in nearly two years. Inflation expectations crept marginally higher but remain well within recent ranges, taking some heat off the Fed. Boom Goes the Sentiment Consumers’ downbeat sentiment has been at odds with their spending for a number of years now. In some ways it’s unsurprising. With inflation surging to a 40-year-high, a rapid pace of monetary tightening to match and persistent concern over the economy falling into recession, there hasn’t been a shortage of developments to weigh on pessimism. But that negativity appears to be fading and sentiment boomed in July. Rising 8.2 points, sentiment rose by the most in a single month since December 2005, and at 72.6, reached the highest level since September 2021 (chart). The improved optimism was also rather broad based, with both consumers’ views on current and future conditions seeing notable gains. The current conditions index rose to 77.5, while expectations picked up to 69.4 (chart). What’s more telling to us is this directional movement rather than the absolute level of sentiment. Sure sentiment remains depressed compared to its pre-pandemic position, but it has pretty much picked up on trend since bottoming in early 2022. Further, the pop in July is encouraging for spending. READ FULL ARTICLE >>