Reflecting concerns about the potential impact of tariffs, the University of Michigan released a report on Friday showing an unexpected deterioration in U.S. consumer sentiment in the month of July.
The preliminary report said the consumer sentiment index dipped to 97.1 in July from the final June reading of 98.2. Economists had expected the index to come in unchanged.
Despite the unexpected decrease, Surveys of Consumers chief economist Richard Curtin noted the reading for July remained nearly equal to the 97.7 average in the prior twelve months.
“So far, the strength in jobs and incomes has overcome higher inflation and interest rates,” Curtin said. “The darkening cloud on the horizon, however, is due to rising concerns about the potential negative impact of tariffs on the domestic economy.”
He added, “Negative concerns about the impact of tariffs have recently accelerated, rising from 15% in May, to 21% in June, and 38% in July.”
The report said the index of current economic conditions fell to 113.9 in July from 116.5 in June, while the index of consumer expectations inched up to 86.4 from 86.3.
On the inflation front, one-year inflation expectations edged down to 2.9 percent in July from 3.0 percent in June and five-year inflation expectations dipped to 2.4 percent from 2.6 percent.