A recent survey on consumer sentiment reveals that Americans are growing increasingly worried about the state of the economy. The preliminary reading of the survey conducted by the University of Michigan dropped to 67.7 in September from 69.5 in August, marking the second consecutive month of decline. This is a significant shift from July when the index had reached a 22-month high before reversing course.
Economic Outlook
The survey examines both consumers’ personal financial situations and their perceptions of the broader economy. It reveals that a gauge measuring consumer sentiment towards the current state of the economy fell to 69.8 in early September, compared to 75.7 in August. However, there was a slight increase in the measure that assesses expectations for the next six months, rising to 66.3 from 65.5 in August.
Inflation Expectations
On the topic of inflation, Americans believe that it will continue to slow down. They anticipate inflation to average at 3.1% in the next year, a decrease from 3.5% in the previous month. Notably, this marks the lowest reading in two and a half years. In contrast, the official rate of inflation, based on the consumer price index, stands at 3.7%.
Mixed Sentiments
The American public appears to hold conflicting views on the state of the economy. While many acknowledge the strength of the job market and low unemployment rates, concerns about potential adverse effects from higher interest rates and persistent inflation linger.
Consumer Outlook
According to Joanne Hsu, director of the survey, consumers remain uncertain about the trajectory of the economy. This sentiment reflects a relative tentativeness among consumers when it comes to their economic outlook.
Market Impact
Following the release of this survey, both the Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) experienced slight declines in Friday’s trading session.
