The preliminary results of an Oct. 1-10 survey of American consumers by the University of Michigan show an unexpected upturn, with respondents anticipating larger income gains and lower inflation during the year ahead, the University of Michigan reported on Friday (Oct. 11).
The Michigan Consumer Sentiment Index (MCSI) — conducted monthly by the University of Michigan — shows that most households anticipate that the U.S. economy will continue to grow during what’s been called the longest expansion in the United States.
The final University of Michigan Consumer Sentiment Index for September rose month over month to 93.2 from a final August reading of 89.8.
Surveys of Consumers Chief Economist Richard Curtin said “stronger finances and lower interest rates” prompted the unexpected increase in consumer sentiment but warned that “these favorable trends did not change consumers' overall prospects for the national economy.” Real income expectations rose to their most favorable level in two decades, he added.
“A slower pace of overall economic growth is still anticipated, including some modest increases in the national unemployment rate during the year ahead,” he said.
The report said the consumer sentiment index climbed to 96.0 in October after rising to 93.2 in September. The continued increase surprised economists, who had expected the index to drop to 92.0.
The consumer sentiment index continued to recover after plummeting to a nearly three-year low of 89.8 in August.
The negative impact on economic prospects resulting from trade policies has dropped from 36 percent to 29 percent. The impeachment inquiry has not had a significant negative impact, the survey indicated.
“The impeachment was negatively mentioned by about half as many as negatively mentioned the GM strike [3 percent versus 5 percent],” according to the survey.
The Surveys of Consumers is a rotating panel survey based on a nationally representative sample that gives each household an equal probability of being selected. A minimum of 500 phone telephone interviews is conducted to quantify household expectations about the overall economy.
The index came in at 98.4 in March, up from 93.8 in February. It also higher than the 97.8 economists were expecting for March.