Topline
Consumer sentiment improved this month after an all-time low reached in June, though consumers are still 21.6% less satisfied with the economy than this time last year, according to preliminary data released Friday morning from the University of Michigan’s monthly survey of consumer sentiment.
New data from the University of Michigan shows a slight rise in consumer sentiment over the past … [+]
Key Facts
The Friday data showed that the Index of Consumer Sentiment stood at 55.1 this month, up 7% from 51.5 in July, but down from 70.3 in August 2021.
The Index of Consumer Sentiment is calculated by adding up a number of questions, such as “Would you say that you are better off or worse off financially than you were a year ago,” and aggregating the results into a number between 0 and 100.
All components of the Index of Consumer Expectations improved this month, especially among low and middle income consumers who feel the strongest effects of inflation, which has slowed slightly over the past month, though the 54.9 expectations rating remains 15.7% lower than August 2021.
As energy prices continue to fall, the median year-ahead expected inflation rate fell to 5%, its lowest reading since February, but remains above the 4.6% projection from a year ago.
So far, the August polling has found that Democrats have far higher confidence in current economic conditions than Republicans, with consumer sentiment at 68.6 for Democrats and 38.1 for Republicans, with an even starker divide in “expectations,” at 73.0 for Democrats and 34.9 for Republicans.
Some 48% of consumers continued to blame inflation for their lower living standards, according to a statement released with the data from Survey of Consumers Director Joanne Hsu.
Key Background
Over the past year, a combined index of all consumer products increased 8.5% in price before seasonal adjustment, the Bureau of Labor Statistics reported on August 10, a condition which has eroded consumer sentiment and expectations, as reflected in the new University of Michigan data. Though the gasoline index fell 7.7% in July and “offset” increases in the price of food and shelter throughout the U.S., consumers still felt the rising price of medical care, motor vehicle insurance, furniture and other items. Stocks opened higher on Friday as investors looked to the University of Michigan survey and its “closely watched” gauge of inflation expectations, MarketWatch reported.
Further Reading
“U.S. stocks open higher as investors await latest reading on inflation expectations” (MarketWatch)
“Consumer Sentiment Rises, Better Than Expected: University of Michigan Survey” (Wall Street Journal)
Source: https://www.forbes.com/sites/jacobstrier/2022/08/12/american-consumers-feeling-more-confident-data-shows/