- Preliminary Univ. of Mich. Consumer Confidence for June rose to 94.8 versus estimates of 88.8 and 86.9 in May.
BOTTOM LINE: Higher-priced oil and strong demand for goods from US consumers propelled the current account deficit higher. The US economy is significantly stronger than that of Europe and Japan, which is the main reason for the widening deficit. I expect declining energy prices and a rising US dollar to help during the second half of the year.
US consumer sentiment rose more than expected in June as the job market improved and gasoline prices eased in recent months. The index is the highest in five months and showed the biggest improvement since January 2004. The unemployment rate fell to 5.1% last month, the best level since September 2001. As well, the average price for a gallon of gasoline at the pump fell to $2.17 for the week ended June 13 from a record $2.32 in the week ended April 11. The current conditions component of the index, which reflects Americans’ perception of their financial situation and whether it’s a good time to buy big-ticket items, rose to 110.4 from 104.9 in May. The expectations component of the index jumped to 84.8 from 75.3 last month. This was the largest gain since the US economy began a significant acceleration in the first half of 2003. I continue to believe consumer spending will remain vigorous through year-end on modest labor market improvements, low interest rates, a strong housing market, a rising stock market and lower energy prices.
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