The University of Michigan index of consumer sentiment improved in June to 85.5 from May’s 82.9 reading, reaching the second-highest level since the pandemic.
The final reading was driven by sentiment among consumers who earn more than $100,000 a year and mostly by their view of future economic conditions, according to Richard Curtin, the survey’s chief economist.
While the index of present conditions fell from 89.4 to 88.6, the future expectations component rose to 83.5 from 78.8, a gain of more than 15%.
“Consumers continued to pay close attention to three critical factors: inflation, unemployment, and interest rates,” Curtin wrote. “Not only did year-ahead inflation expectations fall slightly to 4.2% in June from May’s decade peak of 4.6%, consumers also believed that the price surges will mostly be temporary.”
Inflation is fast becoming the main topic of concern for the markets and the general public. It is also fast becoming a political issue on Capitol Hill, where Republicans are using it to hammer Democrats over what they say is their profligate spending.
Last month, Curtin wrote that consumers’ attitudes about the rising costs of homes, cars and household durable goods “were more negative than at any time since the end of the last inflationary era in 1980.”