Consumer sentiment hits lowest level in 7 months

The timing of the survey's interview window may have affected the responses regarding inflation expectations in a few ways. The interview window for the University of Michigan consumer sentiment survey spanned from May 22 to June 12. The last day consumers could submit survey responses was the same day that May's Consumer Price Index (CPI) was released, which showed a 3.3% increase in prices over the prior year, the lowest monthly headline reading since July 2022.

However, most respondents likely didn't have time to factor in the positive inflation readings from May, which means their inflation expectations might have been influenced more by their recent experiences with high prices. Additionally, the survey window closed before the release of the Producer Price Index, which showed a decline in wholesale prices in May.

This timing could have contributed to the disconnect between consumers' feelings about the economy and the actual data, as highlighted by Federal Reserve Chair Jerome Powell. Consumers may have reported higher inflation expectations based on their recent experiences and concerns about high prices, without fully accounting for the most recent data showing a decline in inflation.

The University of Michigan's consumer sentiment index reading for June was 65.6, which was lower than the May reading of 69.1 and also below economists' expectations of 72. This decline marked the lowest level in seven months.