- The University of Michigan’s consumer sentiment index jumped more than expected in a preliminary September reading as Americans’ views of the US economic recovery improved.
- The gauge rose to 78.9 from 74.1 to hit its highest point in six months. Still, the index sits roughly 22 points from its pre-pandemic high.
- The month’s gains were primarily driven by improved sentiments toward the economy’s future prospects, Richard Curtin, chief economist for the university’s Surveys of Consumers, said.
- The September reading is “consistent with an unchanged flat trend” that could be thrown off by the US presidential election’s outcome or delays in rolling out a coronavirus vaccine, Curtin added.
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Americans are growing increasingly optimistic toward the US economy’s future as reopenings continue and new COVID-19 infections fall.
The University of Michigan’s consumer sentiment index gained to 78.9 in September from 74.1, according to a Friday release. Economists surveyed by Bloomberg expected the gauge to reach 75. The preliminary reading for this month is the highest since March, though the metric is still 22 points below the pre-pandemic high posted in February.
The university’s gauge of current economic conditions jumped to 87.5 from 82.9. The Index of Consumer Expectations rose to 73.5 from 68.5, also hitting its highest since March.
September survey data shows the upcoming US presidential election beginning to have an impact on Americans’ expectations for future economic prospects, Richard Curtin, chief economist for the university’s Surveys of Consumers, said in the report. The month’s gains were primarily driven by improvements to consumers’ economic outlooks. Democrats’ view of economic prospects improved, while Republicans’ outlook weakened.
With the sentiment index steadily swinging higher, Curtin sees non-economic factors playing a bigger role in shaping the rebound’s pace.
“Over the next several months, there are two factors that could cause volatile shifts and steep losses in consumer confidence: how the election is decided and the delays in obtaining vaccinations,” the economist said.
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The sentiment reading is markedly more encouraging than other indicators updated this week. New US jobless claims fell slightly to 860,000 last week, according to data published Thursday by the Labour Department. The drop missed the economist estimate of 850,000 and signalled a slowdown in hiring through the month.
Retail sales also missed expectations, rising just 0.6% in August. The reading suggests economic aid issued in March’s CARES Act has mostly dried up. With Congress making little headway in passing a new bill, consumer spending gauges may flash their first losses in months come October.
A final reading of the sentiment survey will be released on October 2. The Friday release included responses received up to September 14.