US Consumer Sentiment and Inflation: Key Insights from the University of Michigan
How Inflation Affects US Consumer Sentiment
The latest data shows a significant shift in US consumer sentiment, rising to 67.9 in August, compared to 66.4 in July, marking the first improvement in five months.
University of Michigan's Findings
According to the University of Michigan, consumers anticipate an annual inflation rate of 2.8% for the upcoming year, down from 2.9% previously, indicating a decrease in short-term inflation expectations. However, long-term expectations remain at 3% over five to ten years.
Consumer Spending and Durable Goods
- Despite the uptick in sentiment, buying plans for durable goods such as cars dropped to their lowest level since late 2022.
- Consumer spending showed some resilience as data indicated growth at the start of the third quarter.
Federal Reserve Interest-Rate Impact
With 48% of consumers expecting interest rates to decline in the upcoming year, overall purchasing power remains constrained by high borrowing costs, limiting financial optimism.
Political Influence on Sentiment
Survey results reveal a noticeable divide in confidence between political parties, with optimism rising among Democrats following recent political shifts.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.