According to the preliminary estimate, University of Michigan consumer confidence dropped from its multi-year high in May. The preliminary estimate for June showed a decline from 79.3 to 74.1, while a softer drop to 77.5 was forecast.
The breakdown shows that consumers were more pessimistic about both economic conditions (82.1 from 87.2) and the economic outlook (68.9 from 74.3). Remarkably, inflation expectations did not decline further, while the oil price extended its downward trend. One year ahead inflation expectations stabilized at 3.0% Y/Y, while 5-year ahead inflation expectations picked up from
2.7% Y/Y to 2.9% Y/Y. Consumer confidence held up surprisingly well over the previous months while the labour market situation seemed to worsen again a bit. It is not a real surprise that consumer confidence weakened again during the month as sentiment on financial markets worsened due to the euro zone crisis, while also the recovery is showing signs of a slowdown. Apparently, the declining oil price is unable to offset all those worries.