U.S. Consumer Expectations Rise More Than 16% MoM
U.S. Consumer Sentiment Has Improved Significantly
The American Consumer Expectations Index, which reflects people's views on the state of the economy, their own financial situation and employment, rose markedly in August, rebounding from a record low hit this summer, and short-term consumer inflation forecasts deteriorated again despite falling gasoline prices . This is stated in the results of a survey conducted by the University of Michigan and released on Friday.
Preliminary data for August on the overall index of consumer sentiment amounted to 55.1 points, compared with 51.5 points in the previous month. In June, the index reached a record low of 50.
The August figure was higher than the forecast of economists polled by Reuters – they expected the index to rise to 52.5 points.
Although the indicator of current economic conditions, which is also calculated based on consumer surveys, unexpectedly fell to 55.5 from 58.1 points, the indicator of consumer expectations jumped to 54.9 points from 47.3. The 16.1% increase from July was the biggest monthly percentage jump since 2009.
“All components of the expectations index improved this month, especially among low- and middle-income consumers who are particularly affected by inflation,” said Joan Xuyi, leader of the survey team, in a statement.
Indeed, an annual the inflation forecast, according to the poll, fell to a six-month low of 5.0% from 5.2%, while the five-year inflation forecast rose to 3.0% from 2.9%, remaining in the range that prevailed last year .
After hitting a record high above $5 a gallon in mid-June, the average U.S. gas price has fallen more than 20% to below $4 a gallon again, according to the Association of American Motorists. Gasoline prices influence consumer perceptions of inflation and their overall attitude towards the economy.
In early June, when auto fuel prices were still nearing their peak, consumers surveyed initially assumed that over the next five years, inflation will average 3.3%, the highest forecast for that period since 2008.
Friday's survey data from the University of Michigan overlaps with data released Monday by the Federal Reserve the New York system, and could give the Fed another reason to consider cutting back on the rate hike. This review showed a marked decline in inflation expectations over both the one-year and three-year horizons.
The Michigan poll also suggests that policymakers still have a long way to go to fight inflation. The share of consumers who blame inflation for the decline in their standard of living is still around 48%.