Continued pessimism! US consumer confidence falls to an 8-month low

Due to persistent high inflation putting pressure on personal finances, US consumer confidence in July dropped to an eight-month low. Data released by the University of Michigan shows that the final consumer confidence index in July dropped from 68.2 in June (revised from 66) to 66.4. Consumers expect prices to rise by 2.9% year-on-year in the coming year, the lowest level in four months, slightly lower than the 3% expected in June. Furthermore, they also expect average prices to rise by 3% over the next 5 to 10 years, roughly unchanged from a month ago. Consumer confidence has been declining since the first quarter, reflecting high living costs and high borrowing costs, leading to a pessimistic view and expectations regarding personal financial conditions. Although inflation is starting to cool down, wage growth remains moderate, and many Americans have depleted their savings from the pandemic period. Joanne Hsu, the head of the survey, stated, "Consumer confidence has risen 33% from its historic low in June 2022, but remains cautious as high inflation continues to weigh on people's confidence, especially for low-income groups." The current conditions index fell to 62.7, the lowest level since the end of 2022, below July's 64.1; the expectations index fell to 68.8, unchanged from this year's lowest level; the personal financial outlook index fell to the lowest level since October; and durable goods purchase conditions also fell to the lowest level since the end of 2022. Another report released on Friday showed that inflation rose moderately in June, consumer spending remained healthy, potentially paving the way for the Fed to cut rates soon. Scott Helfstein, an analyst at Global X, said in a report, "Moderate inflation and resilient economic growth suggest that the US economy has not landed. Helfstein said, "Growth is well above pre-pandemic trends, and prices remain stable. Forget about a soft landing, this is a non-landing economy." Chris Larkin, managing director of trading and investments at Morgan Stanley, stated: "Overall, it's been a good week for the Fed. The economy seems to be on a solid footing, and PCE inflation remains stable. However, the likelihood of a rate cut next week remains low. While there is still enough time for the economic situation to change before the September FOMC meeting, the data is trending in the direction the Fed hopes for."