Experts Talk Consumer Sentiment, Retail Sales compiles comments from Wall Street economists and strategists on the key economic and market topics of June 9.

Theresa Chen, Barclays Capital

The University of Michigan's index of consumer sentiment rose to 75.5 in the June preliminary report, from 73.6 in May, the highest level in the index since January 2008. This was above our (75.0) and consensus (74.5) estimates. The increase in June was broad-based, as the index of current conditions rose to 82.9 from 81.0 and the index of expectations climbed to 70.7 from 68.8. Although unemployment expectations are still elevated in today's report, nearly equal proportions of respondents reported hearing about job gains vs. job losses, the highest net response in five years.

Inflation expectation measures declined, but this largely reflects a reversion of the increases in the past couple of months. One-year-median inflation expectations dropped to 2.8 percent, from 3.2 percent, and the five-year median inflation expectations dipped to 2.7 percent, from 2.9 percent. This puts both the one-year and five-year median inflation expectation rates back to levels last seen in January 2010.

Scott Anderson, Wells Fargo

Business inventories rose 0.4 percent in April, a somewhat slower pace than during the prior two months. The pace of sales fell off as well but remains positive at 0.6 percent. The inventory-sales ratio stayed flat.

Inventories are approaching their year-ago levels but will likely continue to grow in coming quarters.

The inventory swing across sectors has been a major support to headline GDP of late, accounting for about half the rebound in growth in each of the last two quarters. This level of support will likely not continue, as inventory changes become less severe.

While sales have recovered their largest losses, a weaker job report from the private sector in May will likely keep consumers wary of spending outside of necessities. A subdued recovery in consumer demand means that sales will not likely exert excess pressure on retail inventories.

As inventory rebuilding comes to an end and stimulus effects fade, economic growth will likely look weaker in the second half.

David Wyss and Beth Ann Bovino, Standard & Poor's

Retail sales plunged 1.2 percent in May, led by a 1.7 percent drop in motor vehicle sales. The sharp drop surprised the markets, [which] had expected a small 0.2 percent rise. The motor vehicle drop is not a huge surprise, since the weak April car sales often spill into May and the retail motor vehicle component was stronger in April than the car sales would suggest.

Other categories were also soft, however, including a 9.3 percent plunge in building materials that probably reflects the end of the home buyer tax credit in April and suggests bad news for next week's housing starts data. Gas stations fell 3.3 percent, but that just reflects lower prices. Department stores fell 1.8 percent after a 1.8 percent April drop. Other categories, however, showed strength, with furniture up 1.0 percent, in response to recent home sales, and grocery stores up 0.5 percent.

A much weaker report than expected, however, which casts doubt on the strength of the consumer recovery.

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