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The University of Michigan released its findings on the Consumer Sentiment Index on Friday morning. The preliminary reading for May remained flat at 98.8, compared to April’s final reading. This was more or less in line with the consensus estimate from Bloomberg of 99.0.

This index has been edging off unusually strong readings earlier in the year, which were the result of gains triggered by this year’s tax cut. Inflation expectations in this report, which are closely watched, have been very soft.

The Expectations Index gained 1.1 points and the Current Conditions Index fell 1.6 points. Note that both of these moves were statistically insignificant changes.

However, what may hold more significance is the small uptick in near-term inflation expectations, the downward slippage in income expectations and the expected stabilization of the national unemployment rate at decade lows. The data will thus provide some additional points for both sides in the debate about the timing and number of future interest rate hikes.

According to the survey, eight-in-ten consumers anticipated interest rate hikes during the year ahead, and fewer consumers anticipated further declines in the unemployment rate. Although, all the shift was toward the expectation of a stable unemployment rate rather than an increased rate.

Overall, the data are consistent with a growth rate of 2.7% in real personal consumption from the second half of 2018 to first half of 2019.

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