What the Gradual Fall in US Consumer Sentiment Could Mean



US Consumer Sentiment Index

The preliminary reading of the University of Michigan Consumer Sentiment Index for July came out on Friday, July 14, 2017. Consumer sentiment dropped to 93.1 in July from 95.1 in June 2017, which was below the market expectations of 95. The second reading for July will be announced by the end of the month.

The Consumer Sentiment Index focuses on the following three areas:

  • consumers’ views of their own financial situations
  • consumers’ view of the general economy over the short term
  • consumers’ view of the economy over the long term

The gradual fall in the Consumer Sentiment Index is increasing concerns about the US economy (IWM) (VOO) (VFINX). It could also lead to a fall in consumers’ economic outlook and spending. The gradual fall is also showing that investors could have doubts about Trump’s promised agenda.

The delay in promised reforms is worrying consumers. The Consumer Sentiment Index showed strong improvement in January 2017, mainly due to the high expectations for policy reformation, tax restructures, and fiscal stimulus. Now, these expectations aren’t as strong.

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S&P 500 Index

The broader market S&P 500 Index (SPY) (IVV) gained nearly 0.5% on July 14, 2017. The Consumer Sentiment Index also came out on that day. The market showed some nervousness on that day as major US economic indicators gave weaker performances.

In the next part of this series, we’ll look at US retail sales in June 2017.


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