Source: Economics Group of Wells Fargo Bank, N.A.Summary
Today’s softer-than-expected reading puts consumer sentiment at roughly the midpoint of where it has been over the past two years. The growth in prices may be coming down, but prices are not and that is weighing on households, particularly those in the middle most apt to feel the squeeze.
Why the Long Face?
Consumer sentiment in the current cycle bottomed in the summer of 2022 when it touched a low of 50.0 in June of that year. The two years since then have been characterized by only a modest rebound despite steady growth in consumer spending. That rebound stalled this March and today’s reading for June marks the third consecutive monthly decline. In fact, the current reading of 65.6 roughly marks the midpoint between the high of 79.4 in March and the cycle low of 50.0 reached two years ago this month (chart).
The factors typically associated with rising sentiment moved in the right direction in early June with the stock market notching record highs and gasoline prices falling, albeit more modestly than in May. In last week’s employment report there were some mixed signals. Today’s slack sentiment reading is more consistent with the household survey which showed net job losses and a rising unemployment rate in May.