Preliminary Junes survey data from University of Michigan shows a rebound in headline confidence among Americans as current conditions rise but ‘hope’ – future expectations – slides to its lowest since January.
The sharpest divide was between the record number of households who mentioned recent income gains and the highest expected year-ahead inflation rate since 2015… and the highest income rise expectations since 2007.
At some point in every economic expansion, favorable income and job prospects act to offset higher inflation and interest rate expectations. Only when inflation and interest rates are expected to persistently exceed income and job prospects will consumers begin to curtail their discretionary spending. Indeed, greater certainty about future income and job prospects have become the main drivers of more favorable purchase plans.
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