The numbers: The University of Michigan said its consumer-sentiment index in June fell to a reading of 97.9 from 100 in May.
Economists polled by MarketWatch expected a 99 reading.
What happened: The index for expectations dropped sharply as consumers raised concerns about tariffs, At the time of the survey, there was the possibility of tariffs being levied against Mexico, as well as the existing 25% tariffs on $200 billion worth of Chinese goods. Negative mentions of tariffs were spontaneously made by 40% of all consumers in early June, up from 21% in May and the prior high of 35% in July 2018, the University of Michigan said.
Buying plans for large household durable goods actually rose on buy-in-advance price rationales. Unaided references to buy-in-advance price rationales were mentioned in early June by 19%, up from 12% in May, and just below the 21% level in March 2018, when tariffs on washing machines were first announced.
The index of current conditions however rose slightly, reflecting the continued low unemployment rate and wage gains.
The big picture: The sentiment reading was by no means catastrophic but illustrative of the worries about trade. The University of Michigan said the reading was consistent with a 2.5% rise for household consumption in the year ahead.
University of Michigan also said that consumers anticipated the lowest long-term inflation rate in history of survey, of just 2.2%, an important consideration for the Federal Reserve heading into next week’s meeting. The Fed considers anchoring inflation expectations vital for helping to keep prices stable.
Market reaction: U.S. stocks fell on Friday on concerns over China’s economic growth, even in wake of solid U.S. economic data. Retail sales rose in May, and industrial production topped forecasts.
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