UMich Sentiment Better Than Expected, But Signs Of Weakness Underneath

July's preliminary UMichigan Survey of Consumers report was better than anticipated (feared?) across the board including lower inflation expectations as well as stronger overall sentiment. The underlying narrative remains fairly weak however with inflation remaining a major dampener on sentiment. Some interesting passages from the report text:

• "Current assessments of personal finances continued To deteriorate, reaching its lowest point since 2011. Buying conditions for durables adjusted upwards, owing both to consumers who cited easing supply constraints and those who believed that one should buy now to avoid future price increases, which would exacerbate inflation going forward."
• "The share of consumers blaming inflation for eroding their living standards continued its rise to 49%, matching the all-time high reached during the Great Recession"
• "strength in the economy has centered on labor markets, but signs of weakness began to surface. Almost 40% of consumers expected unemployment to rise in the year ahead, up from 32% last month and 14% a year ago. When asked about their own incomes, the median expected change was only an increase of 0.6%, reaching its lowest value since May of 2020"