Consumer Sentiment:  Some Tariff Impact But Not Dampening Job Outlook 

Bottom Line: Consumers' current sentiment and expectations remained elevated in June, if modestly lower than lower expected and preliminary readings. With expectations for higher wages, consumers are now reporting higher inflation expectations for the year-ahead. As seen in charts below the trend has turned steadily higher with 1-year ahead inflation expectations now up to 3.0%, well above the 12-month average and a level not seen in over 3 years. With one in four survey respondents spontaneously citing tariffs as a potential negative for the economy, consumers appear to be implicitly reaching the conclusion that trade wars are overall modestly negative for future economic growth, while still not likely to impact their own employment and modestly inflationary. Consumer Sentiment was REVISED DOWN by 1.1 points in late June to 98.2%, compared with market expectations for a small decrease to 99.0%. Sentiment has deteriorated by -3.2 points over the past 3 months. With this month's slight increase, compared to May's final level of 98.0%, sentiment is 3.3% ABOVE its year ago level. Current Conditions were REVISED DOWN by 1.4 points to 116.5%. Current conditions are now 3.6% ABOVE their year ago level. Consumer Expectations were REVISED DOWN by 1.1 points to 86.3%. Despite this month's modest decline, compared to May's final level of 89.1%, expectations are 2.9% ABOVE their year ago level.