Don’t Mistake Relief at the Pump for General Improvement in Sentiment

Source: Economics Group of Wells Fargo Bank, N.A.

Summary

Gas prices nation-wide averaged more than $5/gallon in June; in recent days that price has dipped below $4/gallon. The relief comes amid a modest bounce in consumer sentiment from what was an all-time low in June. Near-term inflation expectations have ebbed but longer-term price expectations are worsening. We take little solace in the slightly better sentiment figures.

Look Past the Headlines to See Warning for Durables Spending

On the surface the University of Michigan’s latest survey of consumer sentiment was largely positive, though the details are arguably less encouraging. Overall sentiment rose for the second month in a row and came in just above consensus expectations. To some extent, this modest improvement may say more about relief at the pump amid a trend decline in gas prices than it does about a fundamental change in consumer psyche. READ FULL ARTICLE>>