The US economy is showing some signs of recovery, albeit only modestly. First there were the May employment numbers which surprised everyone when they came in with a jobless rate of 13.3%, down from 14.7% in April. Then there was the GDP number at -5% for Q1. The second quarter is expected to be better. And now, the University of Michigan’s consumer sentiment figures at 78.9 for June, up from 72.3 in May. The chart below shows just how the recovery seems to be developing.
Consumer sentiment is down sharply from its 101 point high last February, but seems to have turned around.
The gauge for current economic conditions increased to 87.8 from 82.3 in May, while the index of consumer expectations rose to 73.1 from 65.9. The median expected inflation rate during the year ahead eased to 3.0% from 3.2% in the previous month.
The primary reason for the sunnier outlook is the fact that many states have reopened for business. Not included in the outlook is the possibility of a spike in Covid19 cases and the potential for a strong recurrence of the virus.
Despite the encouraging statistics, Fed Chairman Powell last Wednesday emphatically cautioned during his FOMC news conference that growth will be very slow for the next several years ahead. This may not have shown up in the Michigan consumer surveys, but upcoming figures may underscore his views.