U.S. consumer confidence fell to an eight-month low in July as high inflation continued to weigh on personal finances.

Data released by the University of Michigan showed that the final consumer confidence index fell to 66.4 in July from 68.2 in June (66 before revision). Consumers expect prices to rise by 2.9% year-on-year in the next year, the lowest level in four months and slightly lower than the 3% expected in June.

They also expect average price increases of 3% over the next five to 10 years, roughly the same as a month ago.

Consumer confidence has been falling since the first quarter, reflecting high living costs and high borrowing costs, which have led to pessimistic views and expectations about people's current personal financial situations.

Although inflation has begun to cool, wage growth remains modest and many Americans have used up their savings during the pandemic. "Consumer confidence has risen 33% from its historic low in June 2022, but remains cautious as high inflation continues to weigh on people's confidence, especially among low-income people," said Joanne Hsu, director of the survey.

The current conditions index fell to 62.7, the lowest level since the end of 2022, down from 64.1 in July; the expectations index fell to 68.8, the same as the lowest level this year; the personal financial outlook index fell to the lowest level since October; and durable goods purchasing conditions also fell to the lowest level since the end of 2022.

Another report on Friday showed inflation rising modestly in June and consumer spending remained healthy, which could pave the way for the Federal Reserve to cut interest rates soon.

Scott Helfstein, an analyst at Global X, said in a report that mild inflation and resilient economic growth suggest that the U.S. economy has not landed at all. "Growth is well above pre-pandemic trends and prices remain stable," Helfstein said. "Forget a soft landing, this is an economy that is not landing."

Chris Larkin, head of trading and investments at Morgan Stanley, said:

“Overall, it was a good week for the Fed. The economy appears to be on solid footing, with PCE inflation remaining largely stable. But odds of a rate cut next week remain slim. While there is plenty of time for economic conditions to change before the September FOMC meeting, the data has trended in the direction the Fed wants.”

The article is forwarded from: Jinshi Data