Consumer Sentiment Solid For June

Consumer sentiment was solid going into Brexit, at 93.5 for final June vs 94.3 in the mid-month flash and against 94.7 in May. The 93.5 final compared against the mid-month reading implies a sub-93 pace over the last two weeks which may be down but is still one of the best readings of the past year.

The current conditions index, at 110.8, is higher than May's 109.9 for a positive on June's spending outlook. The expectations component is down 2.5 points in the month to an 82.4 level that, outside of May, is the best since January. Strength in expectations points to confidence in the jobs outlook.

A special plus in the report is a sudden turn higher in inflation expectations, one that perhaps reflects a delayed reaction to the price jump in gasoline. One-year expectations are up 2 tenths at 2.6 percent with 5-year expectations up 1 tenth and also at 2.6 percent.

The readings on inflation expectations will offer good news to policy makers who have been citing the prior decline as a concern. Certainly not a concern is the state of the U.S. consumer who, boosted by wide employment, is upbeat, at least going into Brexit.

Recent History Of This Indicator:
The consumer sentiment index jumped sharply and surprisingly in May and held on to the bulk of the gain in the June flash. Another small give back is expected for June's final reading, to a consensus 94.0 which, however, would only be 7 tenths below May. Gains in sentiment ultimately reflect confidence in the jobs market.