Consumer Sentiment Surges to 5-Month High

Consumer sentiment in September ticked up to a five-month high, according to Barron's citing the final estimate from the University of Michigan’s consumer survey.

The consumer sentiment index rose to 58.6 in September, showing a modest improvement from August’s 58.2 reading. However, the figure came in lower than the preliminary reading of 59.5, released in mid-September.

“The downward revision to September’s preliminary reading, though still continuing the modest rebound since a record low of 50 set in June, highlights consumer’s precarious position,” wrote Oxford Economics economist Matthew Martin.

The index measuring consumer evaluations of current economic conditions rose by 1.9% in September to 59.7.

“Buying conditions for durables and the one-year economic outlook continued lifting from the extremely low readings earlier in the summer, but these gains were largely offset by modest declines in the long run outlook for business conditions,” said Joanne Hsu, director of consumer surveys.

Consumer sentiment has declined in a “remarkably close fashion” across a broad swath of income levels, Hsu said, even among higher-income people who tend to have an easier time riding out economic downturns. This reflects that consumers in both groups are concerned about the effects of inflation, she added.

The expected inflation rate for the year ahead declined to 4.7%, the lowest reading since last September, while the figure for the next five years dropped to 2.7%. It was the first time it had gone below the 2.9% to 3.1% range since July 2021.

Recent inflation data, however, might derail that shift, boosting inflation expectations in the near future. A recent reading from August’s personal-consumption expenditures report suggests prices will remain elevated for longer than expected. The PCE index, the Federal Reserve’s preferred measure of inflation, ticked up to an annual rate of 6.2% last month, above estimates for a 6% rise.