Americans were feeling more confident about the economy in early October — though that optimism may prove short lived, according to the latest University of Michigan consumer sentiment survey.
The preliminary consumer sentiment index for this month rose to 59.8 from 58.6 in September, having fallen to a record low of 50 in June when gas prices hit historic highs.
The decline in fuel costs since then has allowed consumers to feel a little more optimistic, but the recent decision by OPEC+ to cut oil production, along with the potential for further fallout from Russia’s war in Ukraine, threatens to push up the price at the pump again.
“Continued uncertainty over the future trajectory of prices, economies, and financial markets around the world indicate a bumpy road ahead for consumers,” said Joanne Hsu, Surveys of Consumers director, in a statement Friday.
Sentiment has perked up in recent months; however, it remains at levels similar to those seen during the Great Recession.
The preliminary October survey also showed that consumers are expecting inflation to hit 5.1% during the next 12 months and 2.9% within the next five years, up from September’s reading.
“I think you’re starting to see what looks like a turning point here with consumers becoming more pessimistic again, pulling back on spending going into the holiday season, which is a very important time of year for the consumer,” said Scott Brave, head of economic analytics at Morning Consult.
“That’s setting a tone that maybe this year is going to be a little bit different, maybe not quite as strong of a holiday shopping season as we’ve seen the last couple of years.”
Federal Reserve officials have grown anxious about inflation becoming entrenched in the United States, and consumers’ expectations factor heavily into that equation.
Source: www.cnn.com