The Most Important Thing Today (7/19/23)

• Over the last year, consumer sentiment has been at historically low levels, hitting the lowest level ever in June last year, according to the survey conducted by the University of Michigan.
• Soaring inflation put a significant dent into how consumers felt about their own financial and economic prospects. Since then, attitudes have been significantly impacted by how fast (or slow) inflation improves.
• In the preliminary survey for July, consumer attitudes jumped to their highest level since September 2021, even despite both short-term and longer-term expectations around inflation increasing a bit, though not meaningfully.
• The more positive outlook was primarily driven by the labor market continuing to run tight as well as improving inflation news. However, to reach pre-pandemic levels, sentiment would need to still improve substantially from here.

Source: Helios Quantitative Research, Bloomberg, University of Michigan