Consumer sentiment rises again as inflation pressures ease
We got the latest pulse-taking on the American consumer Friday — how folks are feeling about the economy, the prices they’re paying, the incomes they’re earning to pay those prices. And the news was quite upbeat.
The University of Michigan’s consumer sentiment index shot up heading into early November, rising for the fourth month in a row, to the highest level since April. Consumers’ expectations of future economic conditions have now reached their highest point in nearly four years — since before inflation soared in the wake of the pandemic, savaging consumer sentiment. Will it last?
First, it’s important to note that the most recent University of Michigan survey was done before the election, said director Joanne Hsu.
“Consumers have been looking forward to the resolution of this election for some time. Of course, still quite a bit of uncertainty remains,” she said.
What we do know is, leading up to the election, Americans steadily felt more positive — for purely economic reasons.
“It’s the moderation in inflation expectations, the strengthening in income expectations and continued belief that business conditions will improve in the year ahead,” Hsu said.
In fact, The Conference Board — which also reported a big improvement in consumer confidence before the election — finds that most Americans don’t think which political leader is in power has a major impact on their economic lives.
Chief Economist Dana Peterson said that when surveyors ask consumers what does, “two words continue to be the biggest in the word cloud, and that’s ‘prices’ and ‘inflation.’ Consumers are still preoccupied with the fact that prices are much higher than pre-pandemic,” she said.
Still, “it hasn’t stopped them from spending,” Peterson said. “Even after stimulus checks ran out, they were still working and they had money coming in.”
And lately, consumers have been cheered by lower gas prices — down about 10% nationwide since last year and likely to dip below $3 per gallon soon, said Andrew Gross at AAA.
“For this Thanksgiving, they’re going to be really low,” he said.
That’ll leave consumers with a bit more to spend for the holidays, Gross added.