Consumer sentiment in the U.S. improved slightly in June with shoppers viewing current conditions favorably, but they were less optimistic about the prospects of the overall economy, according to preliminary data from the University of Michigan survey.
The index of consumer sentiment rose 1.3% to 99.3 in June from 98.0 in the previous month.
The current economic conditions index stood at 117.9, up from 111.8 due to consumers' more favorable assessments of their current financial situation and more favorable views of current buying conditions for household durables. The index of consumer expectations fell 1.9% to 87.4 from 89.1 last month.
Richard Curtin, Surveys of Consumers chief economist, noted a sharp divide between the record number of respondents who mentioned recent income gains and the highest expected year-ahead inflation rate since 2015. He said consumers begin reducing their discretionary spending when they expect inflation and interest rates to persistently exceed income and job prospects.
"Indeed, greater certainty about future income and job prospects have become the main drivers of more favorable purchase plans," Curtin said.
Meanwhile, 48% of the consumers surveyed expect the unemployment rate to remain unchanged at its current low level, while 29% expect a decline and 23% expect an increase.
"[T]he continued small declines that are now anticipated in the unemployment rate, as well as more robust gains in household income, will bolster real personal consumption expenditures during the year ahead," Curtin added.