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Three times is a pattern—and consumer sentiment inched upward for the third straight month in October, according to the latest consumer survey data from the University of Michigan.
UMich’s index of consumer sentiment increased 0.6% from September and 10.5% YoY, to 70.5. October’s sentiment is also up by more than 40% from a bottoming-out in June 2022. Consumer Surveys Director Joanne Hsu wrote in a release that this month’s improvement mainly came from “modest improvements in buying conditions for durables, in part due to easing interest rates.”
The school’s rating of current economic conditions was 64.9, an improvement of 2.5% from September, but down 8.1% from October 2023. Its 74.1 index of consumer expectations was down 0.4% from September, but up 25% YoY.
Consumers’ inflation expectations for the coming 12 months remained unchanged from last month, at 2.7%, according to the release. Expectations for long-run inflation were down ever so slightly from last month, from 3.1% to 3%.
Election matters. The latest consumer sentiment index comes about a week before the Nov. 5 presidential election. And perhaps unsurprisingly, Election Day “looms large over consumer expectations,” according to Hsu.
A smaller majority of consumers expected Kamala Harris to win the election, down from 63% in September to 57% this month. Consumer sentiment among Republicans increased 8%, while sentiment decreased by 1% for Democrats. Sentiments among independents increased 4%.
“Regardless of the eventual winner, a sizable share of consumers will likely update their economic expectations based on the results of the election,” according to Hsu.