In July, consumer sentiment rose and hit its highest level since September 2021. The lessening of inflation and the continued strength of the job market are behind this increase. However, overall sentiment remains low. Usually, when consumers sour on the economy, they cut back on spending. This has traditionally made consumer sentiment a key gauge in tracking the economy — but that may no longer be the case.
Past, present and future: The disconnect between sentiment and actual spending behavior makes it difficult to predict consumer behavior, but data points towards possibly higher consumer spending and sales that could benefit businesses.
