Consumer sentiment rose to a five-month high in July as views about the outlook improved and gasoline prices remained below wartime highs.The University of Michigan’s final July sentiment index increased to 55.2 this month, according to the survey released Friday. That’s an improvement from the preliminary estimate of 54.4.Survey responses were collected from June 23 to July 27, a period during which households saw gasoline prices fall to their lowest level since March before renewed tensions in the Middle East drove pump prices back up.“Consumers remain focused on pocketbook issues like purchasing power, while political or military developments remain more in the background,” Joanne Hsu, director of the survey, said in a statement. “Despite recent gains, sentiment is 11% below a year ago, reflecting a generally somber view of the economy,” she said.While households remain under pressure from high prices, data out earlier this week underscored how they continue to spend. Inflation-adjusted consumer spending climbed 0.4% in June, matching the strongest advance in nearly a year.Friday’s report showed a gauge of buying conditions for durable goods — or items meant to last several years — climbed to the highest since October.Both the current conditions gauge and the expectations index increased from a month earlier. Improvements in sentiment were seen across income, age, education and political party. Views on the longer-term economic situation climbed to a one-year high.Consumers expect prices to rise 4.2% over the next year, down from the prior month. They also saw costs rising at an annual rate of 3.3% over the next five to 10 years, in line with June.The report mentioned artificial intelligence has become a “salient” factor for consumers. Hsu said the comments have been negative on net, though consumers cited both positive effects on productivity and negative impacts on the job market.Prakash writes for Bloomberg.
