Consumer Sentiment Data Mostly Higher
View Of Current Economy Strong
Reaching its highest level since 2007, the latest Thomson Reuters/University of Michigan (TR/UM) consumer sentiment index climbed to 85.1 in July, surpassing initial projections of 83.9 and suggesting a strong view of the current economy. "This high level of confidence points toward a continued expansion of consumer spending during the year ahead," said survey director Richard Curtin.
Americans' increasing propensity to spend is being fueled by income and job growth, data showed. On average, there were an additional 22,000 jobs added per month in the U.S. in the first half of 2013 compared to the last half of 2012. In addition, the survey's current conditions index (which includes a gauge on personal finances) hit a six-year high of 98.6.
Consumers seem more likely to make big purchases – like homes or cars – in the short-term due to expectations that interest rates will rise later in the year. In households with at least $75,000 income, more than a quarter cited the advantage of buying homes before prices or interest rates increased in July, up from just 6% during the same month a year ago. The survey found over two-thirds (68%) of consumers expect rates to rise in the next year, as compared to 55% who believed that last month.
Contrasting the TR/UM results, data released this morning from the Conference Board showed consumer sentiment decreased slightly in July, falling to a reading of 80.3 from a revised 82.1 in June. Yet, the survey found consumers are confident in the current state of conditions, as the Conference Board's Present Situation Index actually increased to 73.6 in July, from 68.7 last month. It was the Expectations Index – a monitor of long-range sentiment – that slipped to 84.7 from 91.1 in June.