Consumer Sentiment Increases Sharply
42% Of Survey Respondents Envision Favorable Long-Term Prospects
The latest measure of consumer sentiment released by Thomson Reuters and the University of Michigan (TR/UM) rose to a four-month high, jumping from 74.3 in August to a preliminary reading of 79.2 in September. Also, approximately 42% of survey respondents now envision favorable long-term prospects for the U.S. economy – the highest number in five years and up from 32% last month.
Yet, analysts believe such buoyed levels of confidence may soon wane, even warning too much short-term hope could lead to disappointment in future months. "The sooner it is tempered, the less economic damage will be incurred due to failed expectations," said Richard Curtin, who directs the TR/UM survey.
Still, data reveals consumers are optimistic that the economy will grow, a renewed sense of confidence that some experts think is tied to recent gains in the stock market. An index of consumer expectations, for example, increased by eight points in early September to 73.4. Meanwhile, only 12% of TR/UM survey respondents believe the U.S. unemployment rate will go up in coming quarters, a substantial decrease from the 25% that expected an increase in last month's survey. TR/UM data also shows consumers are slightly more satisfied with their own finances, with 37% acknowledging a worsening personal financial situation, a modest 3% improvement from August.
Even though gas prices remain, on average, about $3.80 per gallon nationally and the cost of food has shot upward this summer, the one-year inflation expectation fell to 3.5%. The five-to-10-year inflation outlook also eased to 2.8% from 3% in August.