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Michigan Consumer Sentiment Index Declines More Than Expected in Preliminary August Survey

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The University of Michigan's preliminary consumer sentiment index fell to 51.0 in August from 55.2 in July, below expectations for a much smaller decrease to 55.0 in a survey compiled by Bloomberg.

The current conditions index fell to 51.8 in August from 54.8 in July, while the expectations reading decreased to 50.6 from 55.4.

Michigan said the sentiment decreased among all political and demographic groups, especially among older and lower-income people who are more vulnerable to reduced purchasing power due to inflation.

Respondents saw one-year inflation expectations at 4.3%, up from 4.2% in July, while five-year inflation expectations remained at 3.3% for the third straight month.

The twice-monthly Michigan Sentiment index measures consumer sentiment early in the current month (the preliminary estimate) and is then revised later in the month (the final estimate). The headline index is a combination of the current assessment and expectations for the near future.

An increase in the reading suggests consumers are more confident, a positive for stocks if that confidence translates into spending. Increased demand is usually inflationary, a negative for bonds.

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