Consumers More Confident, But Fear Inflation, Hsu Says

• UMich preliminary July consumer sentiment rose to 54.4, above the estimated 51, marking a two-month increase.
• The improvement is largely attributed to positive movement in gas prices, leading to slightly softer concerns about inflation for personal finances and major purchases.
• 1-year inflation expectations fell to 4.2% (from 4.6%), but 5-10 year expectations remained unchanged at 3.3%, both still considered very high historically.
• The increase in sentiment was broad across demographics, but a large wealth gap exists, with wealthier consumers feeling more optimistic while others remain 'sour' about the cost of living.

The University of Michigan's preliminary July consumer sentiment survey shows a two-month increase to 54.4, exceeding estimates. While consumers are feeling slightly better due to falling gas prices and softer short-term inflation concerns, sentiment remains historically low. Long-term inflation expectations are flat and still elevated, and a significant wealth gap in sentiment persists.