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

On Friday, the University of Michigan released the preliminary results of its Surveys of Consumers for September.

• The Index of Consumer Sentiment rose to a reading of 69.0 in September, up from 67.9 in August. This is a month-over-month increase of 1.6% and up 1.8% year-over-year (67.8 in September 2023).
• Current Economic Conditions rose to a reading of 62.9 in September, up from 61.3 in August. This is a month-over-month increase of 2.6% but down 11.5% year-over-year (71.1 in September 2023).
• The Index of Consumer Expectations increased to a reading of 73.0 in September, up from 72.1 in August. This is a month-over-month increase of 1.2% and up 11.1% year-over-year (65.7 in September 2023).

In remarks and analysis prepared to accompany the results, University of Michigan Surveys of Consumers Director Joanne Hsu said:

“Consumer sentiment rose to its highest reading since May, increasing for the second consecutive month and lifting about 2% above August. The gain was led by an improvement in buying conditions for durables, driven by more favorable prices as perceived by consumers. Year-ahead expectations for personal finances and the economy both improved as well, despite a modest weakening in views of labor markets.

Sentiment is now about 40% above its June 2022 low, though consumers remain guarded as the looming election continues to generate substantial uncertainty. A growing share of both Republicans and Democrats now anticipate a Harris win. Consistent with their divergent views of the implications of a Harris presidency for the economy, partisan gaps in sentiment inched up. Note that interviews for this release concluded prior to Tuesday’s debate; a more comprehensive look at election expectations will be released next week.

Year-ahead inflation expectations fell for the fourth straight month, coming in at 2.7%. The current reading is the lowest since December 2020 and is well within the 2.3–3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations were little changed, edging up from 3.0% last month to 3.1% this month. Long-run inflation expectations remain modestly elevated relative to the range of readings seen in the two years pre-pandemic.”