Overview
Consumer sentiment in the US has improved notably, with a meaningful rise in the University of Michigan index, while Canadian housing shows tentative recovery and youth unemployment remains a significant challenge.
US Consumer Sentiment and Economic Outlook
- The University of Michigan’s consumer sentiment index rose to 60.5 in June, up from 52.2 in April and May.
- This increase exceeded economists ’ forecasts, signaling a possible positive shift after a half-year of stagnation.
- Current conditions improved to 63.7 and the future outlook rose to 58.4.
- Despite the improvement, sentiment remains 20% below December levels.
- Concerns persist over US tariff policy and resulting economic uncertainty.
- One-year inflation expectations fell from 6.6% to 5.1%; long-term expectations dropped to 4.1%.
- The Federal Reserve is widely expected to hold rates steady in the upcoming meeting, with a cut likely considered in September if inflation cools.
- For Canadian investors, a weaker US dollar may boost Canadian exports and resource stocks, but tariff issues add uncertainty.
- Retail investors could view this as an opportunity, but caution is advised given still-low confidence and potential for renewed volatility.
Canadian Housing Market Update
- Canadian home sales in May increased by 3.6% from April, marking the first monthly rise in over six months.
- Year-over-year, sales were down 4.3%, but new listings rose 3.1% in May.
- Listings remain 13% above last year but are still below typical May levels.
- The average Canadian home price slipped to about $691,000, roughly 2% below last year.
- Housing activity may have been delayed earlier in the year due to tariff-related uncertainty.
Youth Employment in Canada
- The youth unemployment rate in May reached 14.2%, over double the overall 7% rate.
- Unemployment for returning students aged 15–24 was 20.1%, with young men at 22.1% and young women at 18.4%.
- The current youth employment situation is the weakest in over two decades, apart from COVID-related disruptions.
- After a brief post-COVID hiring surge, the market has weakened due to inflation, increased labor supply, and economic uncertainty.
- Many young graduates accept any available jobs, risking long-term wage scarring from entering the workforce during a downturn.
Questions / Follow-Ups
- Is this rise in consumer sentiment a signal to invest further or reason to remain cautious?
- How will ongoing trade tensions and tariff policies influence future economic and market trends?