Americans are feeling better about the outlook for inflation

00:00 Speaker A

Americans are feeling better about the outlook for inflation. That was one of the key takeaways from the June preliminary reading of the University of Michigan’s consumer sentiment survey. So what we’re looking at here is inflation expectations. They were at a 40-year high, their highest level since the early 1980s and in June as consumers digested some tariff rollback, those expectations fell. So we went from consumers expecting one-year inflation at 6.6% down to 5.1% in June. Interesting to point out that five-year expectations also ticked down, those falling from 4.2 to 4.1%. But what I think is most interesting about this chart and why we’re highlighting it as our chart of the day is it’s really kind of one chart that tells the story of the market over the last month and a half and why stocks have risen. This is a story of better than feared data, right? We had fears that inflation would spike to one of its highest levels seen in decades. Now consumers are starting to feel better about that. We could substitute this chart with tariffs. We had tariff estimates soaring. Now they’re coming back down. We could substitute this chart with recession probability. Recession probability soared. Now it’s coming back down. So it is another example of better than feared data sort of coming off that peak fear that we had in April, being one of the key things that’s been driving us back near record highs for the S&P 500.

02:24 Speaker B

I like that. So really it’s just one chart for everything. We can just keep running the same line over and over again for this.

02:31 Speaker A

It all comes back, it always comes back to one chart really.