The current economic conditions sub-index was revised down to 115.2 from 116.1 in the preliminary estimate but was higher than 110.3 in August. The gauge measuring consumer expectations increased less than anticipated to 90.5 from an earlier 91.1 and compared to 87.1 in August.
Inflation expectations for the year ahead edged down further to 2.7 percent from a preliminary of 2.8 percent and 3 percent in August while the 5-year outlook for inflation edged up to 2.5 percent from a preliminary of 2.4 percent (2.6 percent in August).
Most of the September gain was among households with incomes in the bottom third, whose index value of 96.3 was the highest since November 2000. In contrast, the Sentiment Index among households with incomes in the top third lost a total of 8.1% during the past seven months since reaching its cyclical peak of 111.9 in February 2018. This divergence across income subgroups has been observed in past economic cycles and indicates that the expansion has now benefitted nearly all population subgroups.
All households held very optimistic expectations for improved personal finances in the year ahead, the most favorable financial prospects since 2004. Despite a lessening in September of the expected size of gains in nominal incomes, inflation expectations also declined, acting to offset concerns about declining living standards. Consumers anticipated continued growth in the economy and expected the unemployment rate to continue to slowly decline during the year ahead. The single issue that was cited as having a potential negative impact on the economy was tariffs. Concerns about the negative impact of tariffs were cited by nearly one-third of all consumers in September. Those that voiced negative views of tariffs also held much less favorable prospects for the economy and held inflation expectations that were 0.6 of a percentage point higher than those who didn't mention tariffs. The pace of growth in real personal consumption expenditures can be expected to average 2.6% during late 2018 and into the first half of 2019.