Consumer Sentiment Shows Improvement in July

Consumer Sentiment Shows Improvement in JulyThe July revision of the Thomson Reuters/University of Michigan Consumer Sentiment Index came in at 85.1, which is well above the estimates and above the preliminary report as well. Bloomberg had the consensus at 84, close to the preliminary report of two weeks ago that fell in at 83.9. The final June figure was 84.1, so there was a 1 point increase from June to July.

According to experts, a weakness had been noticed in the report, which was unusual considering that job rates have held relatively steady and the stock market continues to high record highs. The revised report is, however, higher than expected, and it came a time when bias could have appeared much softer than stronger.

The Thomson Reuters/University of Michigan Consumer Sentiment Index is an index that some experts that many experts do not consider some consider as accurate at some other reports. The index is actually sold as a subscription and high-frequency traders do receive it earlier than other subscribers.

This revision sets July at the six-year high, meaning that many people across the U.S. felt their financial situations had improved. Reports indicate that an increase in personal wealth, as well as improvement in property values and improvement in stock portfolios due to stocks rising, kept consumer confidence elevated. Job gains have also been shown since the second half of 2012, and therefore, the higher effects of payroll taxes are being cushioned.

The 63 economists in the Bloomberg survey set their estimates from 83 to 86. Reports show that the index is closing in on its average of 89, where it sat in the last five years prior to the big recession that got underway in Dec. 2007. The weekly Bloomberg Consumer Comfort Index rose last week to attain its highest level since Jan. 2008.

Some experts believe that the increasing fear that a significant in interest rates is looming near has encouraged people to speed up purchases, which reflected a higher consumer confidence. The index of buying durable goods rose from 143 to 149, while 68 percent of consumers surveyed in July indicated they expect interest rates to increase in the coming year.

Only 55 percent of consumers surveyed in June expected to see interest rates rise in the coming year. Thus, the proportion of those surveyed who expect to see interest rates rise in the coming year is at its highest since Aug. 2006.

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About the author

Drew is a regular contributor covering trending topics.