US Long-Term Inflation Expectations Drop to One-Year Low; Retail Sales Beat Expectations

Bloomberg on UoM Surveys:

Consumers expect prices will rise at an annual rate of 2.8% over the next five to 10 years, down from June’s 3.1% and the lowest since July of last year, University of Michigan data showed Friday. They see costs rising 5.2% over the next year, compared to last month’s 5.3%.
“Consumers remained in agreement over the deleterious effect of prices on their personal finances,” Joanne Hsu, director of the survey, said in a statement. Roughly half of respondents blame inflation for lowering their living standards, the worst since the 2008 financial crisis, she said.
A gauge of current conditions rose to 57.1, the biggest jump since April 2021, likely reflecting lower gas prices as well as a strong labor market. Retail gasoline prices stand at $4.58 a gallon, down from a record $5.02 in mid-June, according to AAA data.
The university’s measure of future expectations, however, declined to 47.3, the lowest since 1980.

Bloomberg on Retail Data:

The value of overall retail purchases increased 1%, after an upwardly revised 0.1% decline in May, Commerce Department figures showed Friday. The figures aren’t adjusted for inflation.
Nine of the 13 retail categories showed increases last month, according to the report, including furniture stores, e-commerce and sporting-goods stores.
Sales at gasoline stations rose by 3.6%, following a 5.6% advance in the prior month, and driven by a surge in gas prices to more than $5 a gallon in mid-June. Prices have since fallen sharply, suggesting the figures could soften in the July data.
Auto sales climbed 0.8% in June, following a decline in May.
Grocery store sales rose 0.6%, which likely reflects higher prices rather than increased buying activity since the figures aren’t adjusted for inflation. Food prices, along with gas and shelter, were among the leading contributors to the CPI in June.
Restaurant sales, the report’s only services component, advanced 1%.
So-called control group sales — which are used to calculate gross domestic product and exclude food services, auto dealers, building materials stores and gasoline stations — increased 0.8% in June, the largest gain since January.

SeekingAlpha: July University of Michigan Consumer Sentiment:

51.1 vs. 50.0 expected and 50.0 prior.
Expectations: 47.3 vs. 47.0 expected and 47.5 prior.
Current conditions: 57.1 vs. 52.5 expected and 50.0 prior.
Inflation expectations (next year): 5.2% vs. 5.3% prior.
“Consumer sentiment was relatively unchanged, remaining near all-time lows,” said Surveys of Consumers Director Joanne Hsu. “Current assessments of personal finances continued to deteriorate, reaching its lowest point since 2011.”
Consumers' expectations about inflation, though, appeared to hold steady or improve slightly. The median expected year-ahead inflation rate of 5.2% was little changed over the past five months, Hsu said. Meanwhile, “median long run expectations fell to 2.8%, just below the 2.9%-3.1% range seen in the preceding 11 months,” she added.

Links:

Bloomberg on Inflation Data
Bloomberg on Retail Sales Data
Unlinked: Seeking Alpha article titled “Consumer sentiment comes in slightly better than expected in July”

Comments