Consumer Sentiment Inches Up
After four straight months of declines, consumer sentiment in August increased 1.5 index points above July, according to the University of Michigan.
ANN ARBOR, Mich. – The economic outlook over both the short term and long term reached their most favorable levels since April 2024, with a 10% surge in long-run economic expectations that was seen across age and income groups, said University of Michigan economist Joanne Hsu, director of the surveys.
Sentiment is currently 36% above the all-time historic low reached in June 2022.
“Despite these improvements, 47% of consumers blamed high prices for eroding their personal finances, a sign that prices remain a top concern,” Hsu said.
Stock market developments exert little impact on sentiment
This month’s stock market gyrations, led by the largest one-day drop in nearly two years seen on Aug. 5, had little net effect on consumer sentiment. Only consumers with the top tercile of stock holdings saw any declines in sentiment, down only 3% from last month.
In contrast, consumers with smaller holdings or no stock holdings at all reported increases in sentiment since July. These patterns are consistent with recent periods of financial turbulence, like the failure of Silicon Valley Bank in 2023, which similarly generated little movement in overall sentiment, Hsu said.
Consumer Sentiment Index
The Consumer Sentiment Index rose to 67.9 in the August 2024 survey, up from 66.4 in July and below last August’s 69.4. The Current Index fell to 61.3, down from 62.7 in July and below last August’s 75.5. The Expectations Index rose to 72.1, up from 68.8 in July and above last August’s 65.4.
About the surveys
The Surveys of Consumers is a rotating panel survey at the University of Michigan Institute for Social Research. It is based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by phone. The minimum monthly change required for significance at the 95% level in the Sentiment Index is 4.8 points; for the Current and Expectations Index, the minimum is 6 points.
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