US Consumer Sentiment Lower than Expected


The University of Michigan's consumer sentiment for the US fell to 99 in October of 2018 from 100.1 in September and below market expectations of 100.4, preliminary estimates showed. The decline was due to less favorable assessments by consumers of their personal finances as upward revisions in the year-ahead expected inflation rate weakened real income expectations.

The current economic conditions sub-index declined to 114.4 from 115.2 and the gauge measuring consumer expectations also went down to 89.1 from 90.5. Inflation expectations for the year ahead edged up to 2.8 percent from 2.7 percent while the 5-year outlook for inflation fell to 2.3 percent from 2.5 percent.

It should be noted that the sharp selloff in equities overlapped interviewing by only one evening, having virtually no influence on the early October data. In addition, there was no evidence of a spillover from the Kavanaugh hearings to economic prospects. Indeed, confidence in the government’s economic policies rose in October to its highest level in the past fifteen years (see the chart), reflecting the strong performance of the national economy. Most of the October gain was due to an upward adjustment by Democrats, although their evaluations were still well below the much more favorable evaluations of Republicans. When asked about the upcoming election and its potential impact on their own personal finances and on the overall economy, consumers more frequently cited Republicans than Democrats as having a positive effect, with margins of 35% versus 26% for the overall economy and 34% versus 24% for the their own personal finances. A substantial portion, however, replied that there was no difference for the overall economy (36%) or for their own personal finances (41%).

US Consumer Sentiment Lower than Expected


University of Michigan | Joana Taborda | joana.taborda@tradingeconomics.com
10/12/2018 2:09:28 PM