The advanced reading of the University of Michigan’s leading confidence report has brightened the outlook for the struggling US consumer and economy - but not by much. The preliminary reading of the July sentiment survey rose unexpectedly by a modest 0.2 percentage points to 56.6. While these was a small improvement from a quickly falling indicator series, the print marked the first improvement from the indicator in six months and reflected a far more positive outcome than the forecasted drop to 56.4. This improvement in optimism is likely a reflection of the summer season and little more. Average gasoline prices across the US rose to a new record high last week, the average 30-year fixed rate mortgage hit a multi-month high recently, employment and wage growth are slowing, and wealth is being eroded by falling home prices and a notable bearish turn in the equities market. All of this is reflected in the fact that the confidence figure is just off its lowest reading since 1980. Suggesting that spending and sentiment may further worsen with time, the outlook component of the report continued to slip to a new 28 year low of its own. And, potentially making the Fed’s decisions more complicated, inflation expectations for one year forward rose 5.3 percent - the highest since December of 1987. - John Kicklighter, Currency Analyst for DailyFX.com