The economy's doing better and consumer spirits are at their best level of the recovery. First yesterday with the Bloomberg consumer comfort index and now today with the consumer sentiment report which ends July at 85.1 which is the best reading since July 2007. And the implied reading for the last two weeks is even higher, around the 86 area based on the difference between the final reading and the mid-month reading which was at 83.9.
The balance between the two components of the headline composite index shows a little bit more strength in current conditions, which is a plus for the outlook for July's slate of economic indicators that are yet to come out. Though the current conditions index, at 98.6, is up a very convincing 4.8 points from June, it shows a little bit of a fall-off from mid-month, suggesting that the month's strength was centered in the early part of the month which hints at a little bit of limited momentum going into August.
The expectations index, at 76.5, has been higher several times this recovery and it too is down a little bit from mid-month. The limited strength here may hint at concerns over future income that may be tied in part to the rise underway in gasoline prices.
But inflation expectations are still contained with the 1-year outlook at 3.1 percent, which is up only 1 tenth from June, while the 5-year outlook is actually down 1 tenth at 2.8 percent.
The Dow is moving slightly off opening lows following today's report. Consumer spirits are up, boosted by home prices and the stock market though they are likely being pulled back a bit by flatness in the jobs market and, again, by rising gas prices.
Market Consensus before announcement
The Reuter's/University of Michigan's consumer sentiment index slipped in the first read for July with the composite posting at 83.9 versus the final for June at 84.1. Consumers may be feeling better about the current economy, but they are less optimistic about the future. Weakness was in the expectations component which dropped to 73.8 from 77.8 in June. However, current conditions improved to 99.7 in mid-July from 93.8 for June. The current conditions index is at its highest level since mid-2007. The economic outlook index was little changed at 103.0 versus 104.0 in June.