In Washington, a recent report reveals that American perceptions of the economy have become slightly more pessimistic this month after experiencing two months of gradual improvements. The University of Michigan’s consumer sentiment index, which was published on Friday, saw a decrease from 70.1 in September to 68.9 in October. This previous figure represented the highest point since May. Joanne Hsu, who oversees consumer surveys at the university, stated that many consumers are still expressing dissatisfaction regarding the persistently high prices.
Hsu further noted that individuals may be holding off on forming definitive opinions about the economy, opting instead to wait until the completion of the presidential election campaign. Economic analysts pointed out that this decline in sentiment follows a reduction in the Federal Reserve’s benchmark interest rate in September. While gas prices have been decreasing and inflation has moderated, both of which typically enhance consumer confidence, the current sentiment doesn’t reflect these trends.
Factors such as Hurricane Helene and ongoing conflicts in the Middle East may have contributed to the recent dip in consumer outlook, according to Bradley Saunders, an economist at Capital Economics. Additionally, even though mortgage rates had dropped in anticipation of the Fed’s interest rate cut, they have witnessed an upward trend over the last two weeks.
Looking back, the consumer sentiment index hit its lowest point in June 2022 when inflation surged to 9.1%. Since then, the index has improved by approximately 40%, though it is still significantly lower than levels seen prior to the pandemic. In October, the survey indicated that Republicans experienced a more pronounced decline in economic sentiment compared to Democrats.
Despite these unfavorable responses in economic confidence surveys, consumers continue to spend, which is providing support to the overall economy. Projections from the Federal Reserve Bank of Atlanta suggest that economic growth could have reached a solid 3.2% during the third quarter from July to September.
