Consumer sentiment in the United States dropped 3.6 index points in September, reaching the lowest level since May, when the popular gauge of consumer optimism in the country had hit an historic low of 44.8. With the war in Iran dragging on and its effect on energy prices highly visible at the gas pump, Americans appear to be losing hope in inflation returning to its 2-percent target anytime soon. Year-ahead inflation expectations increased to 4.6 percent in September, while long-run inflation expectations ticked up to 3.4 percent.
The September reading of the University of Michigan’s monthly Index of Consumer Sentiment marked only the fourth time in the survey's history, dating back to 1952, that the index dropped below 50, with the other three occasions coming between April and June of this year. The results illustrate just how downbeat Americans are about their personal finances and the economic outlook.
According to Surveys of Consumers Director Joanne Hsu, high prices remain the most (de)pressing issue for Americans. Survey responses suggest that buying conditions for durable goods improved partly because consumers expect even higher prices in the future, which could result in a frontloading effect that bolsters consumer spending in the short term at the expense of future spending.
