University of Michigan Reports Preliminary Results of Its Consumer Sentiment Index for September

The University of Michigan on Friday (9-15-23) released the preliminary results of its Consumer Sentiment Index (CSI) for September.

• The Index of Consumer Sentiment declined to a reading of 67.7 in September, down from its reading of 69.5 in August. This is a month-over-month decline of 2.6% but up 15.5% year-over-year (58.6 in September 2022).
• The Current Economic Conditions fell to a reading of 69.8 in September, down from its reading of 75.7 in August. This is a month-over-month decline of 7.8% but up 16.9% year-over-year (59.7 in September 2022).
• The Index of Consumer Expectations increased to a reading of 66.3 in September, up from its reading of 66.5 in August. This is a month-over-month increase of 1.2% and up 14.3% year-over-year (58.0 in September 2022).

In remarks and analysis prepared to accompany the release of the preliminary September Consumer Sentiment Index, Joanne Hsu, Director of Surveys for the University of Michigan, said:

“Consumer sentiment inched down a scant 1.8 index points this month and has been essentially flat for the past two months. At 67.7 points, sentiment is currently about 35% above the all-time historic low reached in June 2022 but remains shy of the historical average reading of 86. Sentiment this month was characterized by divergent movements across index components and across demographic group with little net change from last month. Notably, though, both short-run and long-run expectations for economic conditions improved modestly this month, though on net consumers remain relatively tentative about the trajectory of the economy. So far, few consumers mentioned the potential federal government shutdown, but if the shutdown comes to bear, consumer views on the economy will likely slide, as was the case just a few months ago when the debt ceiling neared a breach.

Throughout the survey, consumers have taken note of the stalling slowing down inflation, but they do expect the slowdown to resume. Year-ahead inflation expectations moderated from 3.5% last month to 3.1% this month. The current reading is the lowest since March 2021 and is just above the 2.3% – 3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations came in at 2.7%, falling below the narrow 2.9% – 3.1% range for only the second time in the last 26 months. In comparison, the long-run inflation expectation ranged from 2.2% and 2.6% in the two years pre-pandemic.”