Consumer Sentiment Continues to Slide, Despite Softening Inflation 

The numbers are starting to stack up against U.S. consumers, and the picture they’re painting isn’t pretty. 

In July, the University of Michigan’s consumer sentiment index fell to 66.4, marking the lowest level in eight months. That’s down from 68.2 just a month ago. 

The good news is that year-ahead inflation expectations also saw a slight decrease last month, dropping to 2.9% from 3%, the lowest in four months. But high prices and elevated borrowing costs are still negatively impacting consumer attitudes, particularly among lower-income Americans.  

As a result, both expectations and the index of personal finances outlook have declined to their lowest points since the end of 2022. 

Given that the U.S. consumer is a key driver of the overall economy, these sentiment findings offer a glimpse into what’s happening on the ground that might have an impact on GDP. We know consumers are facing significant challenges now, so we’ll be watching to see if these expectations turn into reality.  

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