University of Michigan survey reveals growth in consumer confidence

June 30 (UPI) —

The latest University of Michigan survey reveals that the U.S. consumer is experiencing a growth in confidence and optimism, expecting inflationary pressures to ease. However, the high prices remain a major concern.

In June, the University of Michigan published the final results of its consumer sentiment survey. The data shows an 8.8% increase in confidence compared to the previous month and a significant 28.8% increase from the previous year.

“Overall, this remarkable upswing reflects a recovery in attitudes due to the resolution of the debt ceiling crisis earlier in the month, as well as the positive outlook on decreasing inflation,” commented Joanne Hsu, the survey director.

During late May and early June, the broader markets faced uncertainty as congressional Republicans stood firm on future spending limits, leading to a standoff over the debt ceiling.

“Passing this budget agreement was crucial,” stated President Joe Biden after the impasse was resolved in early June. “The stakes could not have been higher.”

Inflation for the year up to May was reported at 4%, significantly lower than the 9.1% level observed last summer. However, the May level remains twice as high as the target rate set by the Federal Reserve.

According to the survey results from the University of Michigan, consumers believe inflation could drop to 3.3% in June, which would be the lowest reading since March 2021.

“Views regarding personal financial situations remained unchanged as consumers continue to face the challenges of high prices and expenses,” added Hsu.

The survey results from the University of Michigan align with the sentiment observed by The Conference Board earlier this week. Dana Peterson, the chief economist of the board, noted that the U.S. consumer in June expressed more positive views on employment prospects.

Regarding wages, approximately 30% of survey participants expect to be better off in six months, compared to 14% who anticipate being worse off.

“This might reflect consumers’ belief that labor market conditions will remain favorable and that there will be further declines in inflation ahead,” explained Peterson.