Americans were cautious about the country’s economic future even before news broke that the U.K. had voted to leave the European Union, according to the University of Michigan’s final index of consumer sentiment for June.
The survey, released Friday, fell to 93.5, down from preliminary readings of 94.3 earlier this month and from May’s 94.7. Economists had expected 94.0, but the measure was still one of the best of the past year.
Richard Curtin, who oversees the survey, said consumers were slightly less optimistic in late June because of rising concerns about the economy’s prospects.
“While no recession is anticipated, consumers increasingly expect a slower pace of economic growth in the year ahead,” he explained. “Importantly, the persistent strength in personal finances will keep the level of consumer spending at relatively high levels and continue to support an uninterrupted economic expansion.”
The monthly report surveys 500 households on their attitudes toward business conditions, unemployment, personal finances and inflation.
One positive: consumers were upbeat about current economic conditions. The measure rose 0.8% month-to-month from May’s 109.9 to 110.8, and 1.7% year-over-year from last June’s 108.9. However, the index of consumer expectations fell to 82.4. That’s a month-to-month decline of 2.9% and a year-over-year drop of 6.2%.
“Over the past 18 months, the sentiment index has shown only minor fluctuations about a very positive trend, with the June 2016 level a bit higher than the overall average,” Curtin said. “This relative stability stands in sharp contrast to the much more volatile path of GDP (gross domestic product). The stability in the overall sentiment index reflects a gradual improvement in assessments of current conditions being offset by a downward drift in the economic prospects.”
Although the data is consistent with GDP growth falling slightly below 2 percent in 2016, Curtin said he still expects real consumer spending to increase by 2.5% this year and by 2.7% in 2017.