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Consumer Sentiment: Edged Higher, Still Down On Month

July 30, 2021
Bottom Line:  Consumer sentiment rebounded just a touch in late July but remained lower than month-ago readings as consumers continued to report high inflation expectations. Consumers reported being worried about the high prices of homes, vehicles, and household durables. Year-ahead inflation expectations stood at 4.7%, down slightly from the highs but still well above the stable pre-pandemic levels of about 2.5%. That said, 5-year inflation expectations were only up to 2.8%, just a touch above the long-term averages. Overall, consumer sentiment is still well below pre-pandemic levels.  The outlook remains uncertain as we near an infection point where consumers will either: 1. continue to spend with little resistance to higher prices because of recent wage and stimulus gains; or 2. start to retrench soon as higher prices dampen affordability, especially for large ticket items.
Consumer Sentiment was REVISED UP by 0.4 points in late July to 81.2%, compared with market expectations for  no change to 80.8%. Sentiment has deteriorated by -7.1 points over the past 3 months. Despite this month's modest decline, compared to June's final level of 85.5%, sentiment is 12.0% ABOVE its year-ago level.
Current Conditions were UNCHANGED at 84.5. Current conditions are now 2.1% ABOVE their year-ago level.
Consumer Expectations
were REVISED UP by 0.6 points to 79.0.   Despite this month's modest decline, compared to June's final level of 83.5, expectations are 19.9% ABOVE their year-ago level.