University of Michigan Reports Final Results of Its Consumer Sentiment Index for August

The University of Michigan on Friday (8-25-23) released the final results of its Consumer Sentiment Index for August.

• The Index of Consumer Sentiment declined to a reading of 69.5 in August, down from 71.6 in July. This is a month-over-month decline of 2.9% but up 19.4% year-over-year (58.2 in August 2022).
• The Current Economic Conditions fell to a reading of 75.7 in August, down from 76.6 in July. This is a month-over-month decline of 1.2% but up 29.2% year-over-year (58.6 in August 2022).
• The Index of Consumer Expectations retreated to a reading of 65.5 in August, down from 68.3 in July. This is a month-over-month decline of 4.1% but up 12.9% year-over-year (58.0 in August 2022).

Commenting on the results of the August report, Joanne Hsu, Surveys of Consumers Director at the University of Michigan, said:

“After rising sharply for the past several months, consumer sentiment moved sideways in August with a small decline that is not statistically different from July. Sentiment reached its second highest reading in 21 months and is now about 39% above the all-time historic low reached in June of 2022. While buying conditions for durables and expectations over living conditions both improved, the long-run economic outlook fell back about 12% this month but remains higher than just two months ago. Consumers weighed a combination of positive and negative factors in the economy, which led to differing offsetting trends across demographic groups. Consumers perceive that the rapid improvements in the economy from the past three months have moderated, particularly with inflation, and they are tentative about the outlook ahead.

Year-ahead inflation expectations edged up from 3.4% last month to 3.5% this month. The current reading remains above the 2.3–3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations came in at 3.0% for the third consecutive month, staying within the narrow 2.9–3.1% range for 24 of the last 25 months. These expectations are elevated relative to the 2.2–2.6% range seen in the two years pre-pandemic.”