Consumer sentiment in the U.S. fell less than initially estimated in July from the previous month, but consumers were still increasingly worried about the possible economic impact of trade tariffs, according to the latest survey data from the University of Michigan.
The index of consumer sentiment slipped to a reading of 97.9 this month, up from the initial 97.1 estimate but still lower than the June level of 98.2. Econoday had forecast an unchanged July reading.
The current economic conditions index retreated to 114.4 from 116.5 in June, while the index of consumer expectations rose to 87.3 from 86.3. Both indicators were also revised up from their initial July readings.
Surveys of Consumers Chief Economist Richard Curtin said favorable job and income prospects have kept consumer confidence at elevated levels despite expectations of higher inflation and interest rates in the year ahead.
"What is unique about the current situation is the potential impact of tariffs on the domestic economy. Concerns about tariffs greatly accelerated in the July survey," Curtin said.
The survey results showed that 35% of households spontaneously cited tariffs as having negative economic effects in July, up from 21% in June and 15% in May.
Curtin said consumers who negatively viewed tariffs were more pessimistic about the economy and had higher inflation expectations. They were also more likely to expect an increase in unemployment.
"Of course, these negative economic expectations could quickly disappear if the trade issues with Europe are promptly settled and immediately followed by agreements with China, Canada, and Mexico," Curtin said. "Resolution is critical to forestall decreases in consumer discretionary spending as a precaution against a worsening economy."