U.S. consumer sentiment falls in June, current levels to underpin consumer spending in months ahead

U.S. consumer confidence dropped from its recent highs in June. The preliminary June estimate of the University of Michigan consumer sentiment index dropped three points to 94.5. The fall was widely based with the current conditions index that dropped to 109.6 from 111.7 and the future expectations index that fell to 84.7 from 87.7, both falling compared to the earlier month.

Consumer sentiment rose sharply in the months immediate after the presidential elections last year; however, it has come off those highs since. However, even at current lower levels, the University of Michigan survey is seen as indicating that consumer sentiment stays strong.

Inflation expectations remained the same in June for the one year ahead measure at 2.6 percent and rose for the five-to-ten year ahead measure to 2.6 percent from 2.4 percent. Overall, the June report implies weakening in consumer enthusiasm. However, the sentiment at these levels are expected to be supportive of consumer spending in months ahead, noted Barclays in a research report.