U.S. Consumer Sentiment Edged Up in Late October, Still Low
(Bloomberg) -- U.S. consumer sentiment edged up slightly in late October while remaining well below pre-pandemic levels, suggesting Americans’ anxiety over Covid-19 is persisting just before the election.
The University of Michigan’s final sentiment index for October was 81.8, compared with a preliminary reading of 81.2 early in the month and September’s final reading of 80.4, according to data released Friday. The median estimate from economists surveyed by Bloomberg called for 81.2.
While the gauge is at a seven-month high, the level compares with 101 in February, which was close to the highest since 2004.
The gauge of current conditions dropped 1.9 points from the prior month to 85.9, compared with the preliminary reading of 84.9. A measure of expectations increased 3.6 points from September to 79.2 and compared with a preliminary 78.8.
While partisan divisions are still deep, optimism among Democrats surged over the past three months, boosting their expectations to the highest in more than a year. That coincides with polls showing Democratic challenger Joe Biden ahead of President Donald Trump, and the survey also shows consumers expect a Biden win.
At the same time, concerns about the pandemic continue to weigh heavily on consumers’ outlooks, as Americans judged it a “toss-up” whether the economy would experience another downturn over the next five years, according to Richard Curtin, director of the survey.
“Unlike the 2016 election, renewed optimism now requires progress against the coronavirus and mitigating its uneven impact on families, firms and local governments,” Curtin said in a statement.
Other measures of consumer sentiment have also been downbeat. The Conference Board’s gauge dropped slightly in October, while the weekly Bloomberg Consumer Comfort Index is at the lowest since August. Both are well below pre-crisis levels.
In a positive sign, a separate government report earlier Friday showed that Americans’ incomes increased in September by more than expected, boosted by employment gains and helping to propel consumer spending at the end of the third quarter.
The Michigan report also showed inflation expectations remained subdued. Consumers anticipated prices rising 2.6% in the year ahead, while longer-term inflation expectations fell to 2.4%.The survey was conducted Sept. 30 to Oct. 26. The cutoff for the preliminary results was Oct. 14.
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