Consumer sentiment inched up to its highest point in five months in September but worries about the long term outlook increased.
The University of Michigan consumer sentiment index rose to 59.5 in first two weeks of September, an improvement from August’s 58.2 reading. Economists had forecast an increase to 59.3.
This is the best reading since April and well above the very grim June score fo 50.
“Personal finance components of the index as well as buying conditions for durables remained at similar, relatively low levels from last month. After the marked improvement in sentiment in August, consumers showed signs of uncertainty over the trajectory of the economy,” the survey’s chief economist, Joanne Hsu, said.
The decline in gasoline prices appears to be boosting consumer sentiment and lowering inflation expectations. Year ahead price level expectations fell to an increase of 4.6 percent, the lowest reading since September of last year. Longer-term expectations also fell.
“The one-year economic outlook continued lifting from the extremely low readings earlier in the summer, but these gains were largely offset by modest declines in the long run outlook,” Hsu said.
Hsu said consumers continued to show substantial uncertainty over future inflation.
“Uncertainty over short-run inflation reached levels last seen in 1982,” Hsu said.