Economy & Markets: Consumer Sentiment Surges Amid Improved Buying Conditions

Consumer Sentiment Rises in US

A new survey shows that consumer sentiment is on an upward trajectory, reflecting a rise in confidence regarding the economy and financial conditions. The University of Michigan Consumer Study released Friday morning indicated that Consumer Sentiment climbed to 69 in September from 67.9 in August. This figure is also an improvement from 67.8 a year prior, marking the highest level since May.

Driving Forces Behind the Sentiment Shift

The boost in sentiment is primarily attributed to enhanced buying conditions for durable goods, as consumers report increasingly favorable price perceptions. Additionally, expectations regarding personal finances and the overall economy have shown improvement, even while outlooks regarding labor markets have softened somewhat.

• Sentiment is approximately 40% above the low recorded in June 2022.
• The gauge of current economic conditions rose to 62.9, up from 61.4, though it remains below last year's 71.1.
• The Index of Consumer Expectations has surged 11.1% year-on-year, reaching 73 in the preliminary September report.

Inflation Expectations Trend Downwards

Year-ahead inflation expectations have decreased for the fourth consecutive month, now sitting at 2.7%, which marks the lowest reading since December 2020 and indicates a return to the 2.3-3% range observed prior to the pandemic.

Long-run inflation expectations edged slightly up from 3.0% the previous month to 3.1% this month, remaining somewhat elevated compared to pre-pandemic levels.