US economic confidence/ consumer confidence index/ American consumer outlook/ Newslooks/ NEW YORK/ U.S. consumer sentiment rose in September for the second consecutive month, reaching its highest point since May. The University of Michigan’s index increased to 69, supported by lower prices for durable goods. Despite this improvement, uncertainty surrounding the upcoming election continues to impact consumer confidence.
US Consumer Sentiment Quick Looks:
- Consumer sentiment increased to 69, the highest since May.
- The improvement is driven by lower durable goods prices.
- Consumer confidence remains below pre-pandemic levels.
- Uncertainty surrounding the 2024 election dampens optimism.
- The survey was conducted before the September debate.
- Spending levels remain high, but credit card debt is rising.
- Economists worry about potential consumer cutbacks in the future.
US Consumer Sentiment Rises Again, Still Subdued
Deep Look:
U.S. consumer sentiment improved for the second month in a row this September, according to a report from the University of Michigan. The consumer sentiment index rose to 69 in the preliminary reading, marking its highest level since May and an increase from 67.9 in August. This uptick in consumer confidence has been attributed to declining prices for durable goods such as cars and furniture, which has helped boost consumers’ outlook on the economy.
Although sentiment has climbed nearly 40% since June 2022, when inflation soared to 9.1%, the index remains significantly lower than pre-pandemic levels. Inflation had a major impact on consumer outlook during its peak last year, but lower prices for long-lasting goods appear to have lifted sentiment in recent months.
Despite the increase, uncertainty surrounding the upcoming 2024 election continues to weigh on consumers. Joanne Hsu, director of consumer surveys at the University of Michigan, stated that political uncertainty is a key factor affecting consumer confidence. “Consumers remain guarded as the looming election continues to generate substantial uncertainty,” Hsu said. She added that a growing share of both Republican and Democratic respondents now expect Vice President Harris to win the upcoming election, although the survey was conducted prior to the most recent debate.
Consumer sentiment improved most notably among Democrats in September, though it dipped slightly for independents and Republicans. Even with improved confidence, Americans have been maintaining strong spending habits. Retail sales rose in July, and the U.S. economy expanded at a solid 3% annual pace during the second quarter of 2024.
However, this spending behavior has raised some concerns. Americans are saving less and taking on more credit card debt, a trend that has alarmed economists who worry that consumers may soon be forced to reduce their spending. If this occurs, it could slow down economic growth in the coming months, potentially impacting consumer sentiment further.
