The University of Michigan consumer sentiment index has a large upward revision to 68.2 in the final June report from the preliminary 65.6, and is close to the final 69.1 in May. The consensus for June is 65.7 in the Econoday survey of forecasters. Although consumer sentiment remains below the first four months of 2024, the May and June readings suggest that the slide has halted.

The index for current conditions is revised up to 65.9 in June after 69.6 in May. Consumers continue to be worried about inflation and a weaker job market in the near future along with consequent opportunities for higher compensation. June is the lowest since 64.9 in May 2023. The expectations index is revised up to 69.6 in June after a final 68.8 in May. It points to improvement in the near-term outlook although consumers are feeling the weight of uncertainty in regard to household finances and the geopolitical environment.

The 1-year inflation expectations measure is revised down to 3.0 percent in June, down from 3.3 percent in May and much the same as a year ago when the measure was 3.4 percent. One-year expectations tend to be more volatile, especially when prices for gasoline fluctuate. The 5-year inflation expectations measure is at 3.0 percent in June, a slight downward revision from the preliminary report and the same as in May and June 2023. While 5-year inflation expectations aren't falling much, neither are they losing their anchor. Fed policymakers are looking at a years-long horizon for getting inflation sustainably back down to the 2 percent objective, and the survey of consumers suggests that respondents are anticipating this as well.

Consumer sentiment is expected at 65.7 for final June, up a tenth from the preliminary reading and down from 67.4 in May. Year-ahead inflation expectations for final June are seen unchanged at 3.3 percent.

The University of Michigan's Consumer Survey Center questions households each month on their assessment of current conditions and expectations of future conditions. Preliminary estimates for a month are released at mid-month and are based on about 420 respondents. Final estimates are released near the end of the month and are based on about 600 respondents.

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer sentiment index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.