Consumer sentiment has remained virtually the same in the last three months, according to the University of Michigan Surveys of Consumers.

July’s reading was a statistically insignificant 1.8 index points below June, well under the margin of error, said U-M economist Joanne Hsu, director of the surveys.

Expectations for business conditions improved for the short run but slipped for the long run. Sentiment has lifted 33% above the June 2022 historic low amid expectations for a continued slowdown in inflation. However, consumer attitudes toward the economy are guarded as high prices remain a drag for consumers, particularly for those with lower incomes, Hsu said.

“Continued strength in consumer spending is consistent with the fact that sentiment among wealthy and high-income consumers—those with the most purchasing power—has climbed sharply over the past two years,” Hsu said. “These consumers generate a disproportionate share of spending and have been supported not only by rising asset values and incomes, but also growing confidence in the economy as well. In contrast, the burden of high prices continues to drag down sentiment for less wealthy consumers.”

Election developments exert little impact on sentiment

Many consumers expressed that their expectations for the economy are contingent on the outcome of the upcoming election. At the same time, there is little evidence that recent election developments—the Biden-Trump debate, the Trump assassination attempt and Biden’s exit from the presidential race—moved overall economic sentiment this month.

While sentiment slipped from June for Democrats, it was essentially unchanged for Independents. As the presidential campaign continues to take shape and policy discussions become more clear, the election may become more salient for consumer attitudes toward the economy, Hsu said.

Wealth gap in sentiment widens

This month, sentiment for consumers with the largest stock holdings rose, while it fell back for those with little or no stock wealth. This continued a trend of a widening wealth gap in sentiment; consumers with the largest stock holdings have seen a 71% increase in sentiment since June 2022, in contrast to only an 11% gain for those without stocks.

The sentiment gap between consumers with large stock holdings and those without stocks currently stands at 33 index points, which is even larger than the well-known partisan gap in sentiment this month.

These patterns, Hsu said, reflect substantial variation in economic experiences; rising stock markets benefit consumers with stock portfolios but leave behind consumers who do not own stocks. Likewise, during stock market downturns, those with large holdings will experience losses that would be avoided by those with no holdings.

Consumer Sentiment Index

The Consumer Sentiment Index fell to 66.4 in the July 2024 survey, down from 68.2 in June and below last July’s 71.5. The Current Index fell to 62.7, down from 65.9 in June and below last July’s 76.5. The Expectations Index fell to 68.8, down from 69.6 in June and above last July’s 68.3.

About the surveys

The Surveys of Consumers is a rotating panel survey at the University of Michigan Institute for Social Research. It is based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by phone. The minimum monthly change required for significance at the 95% level in the Sentiment Index is 4.8 points; for the Current and Expectations Index, the minimum is 6 points.