US: Focus on University of Michigan consumer sentiment – Nomura

Analysts at Nomura explain that the US consumer optimism remained elevated in May but pulled back further from the recent March high of 101.4 to 98.0.

Key Quotes

“Despite the small declines in recent months, we think consumers remained optimistic in June. We expect their optimism, bolstered by recent tax cuts, to help propel consumer spending during 2018. Spending has picked up in recent months after a slow start to the year and a healthy job market combined with steady income growth should help to continue this trend.”

“Short-term inflation expectations in the May University of Michigan consumer survey have picked up recently, consistent with increases in retail gasoline prices, increasing 0.4pp above their recent October 2017 low to 2.8%. However, longer-term expectations have remained unchanged at 2.5% over the same period. It is possible that the June Michigan report indicates a modest increase in short-term inflation expectations given continued elevation in gasoline prices.”