Consumer Sentiment:  Strong Headline, But Expectations Losing Momentum

Bottom Line: Consumers' assessment of the current conditions rose sharply in early June, but their expectations for future conditions fell to the lowest level of the year. While the steady ascent of the current conditions index since the re-acceleration after the 2016 US election continues, the expectations index has lost momentum and is even below the peaks seen in late 2016. This suggests that while some consumers are seeing wage gains, many workers are not seeing gains and are increasingly concerned about rising overall inflation. 1-year ahead inflation expectations are at the highest levels in a year and even 5- to 10-year inflation expectations are turning higher after a long downtrend. Consumer Sentiment ROSE by 1.3 points in early June to 99.3%, compared with market expectations for an increase to 98.5%. With this month's slight increase, sentiment is now 4.4% ABOVE its year ago level. Current Conditions ROSE by 6.1 points to 117.9%. This is 4.8% ABOVE their year ago level. Consumer Expectations FELL by 1.7 points to 87.4%. Despite this month's slight decline, expectations are 4.2% ABOVE its year ago level. 1-year ahead inflation expectations were higher at 2.90%, while 5-year expectations were up 0.10% to 2.60%