Consumer sentiment ticks up

U.S. consumer sentiment increased slightly in early October to reach its highest level in six months.

The University of Michigan’s preliminary estimate of the consumer sentiment index hit 59.8 in October, up from 58.6 in September. It was the highest reading since April. The index measuring Americans' assessment of current economic conditions increased to 65.3 from 59.7 But the measure for short-term expectations fell to 56.2 from 58.0 in September.

“Sentiment is now 9.8 points above the all-time low reached in June, but this improvement remains tentative, as the expectations index declined by 3% from last month,” said Joanne Hsu, surveys of consumers director, University of Michigan.  “Continued uncertainty over the future trajectory of prices, economies, and financial markets around the world indicate a bumpy road ahead for consumers.”

The median expected year-ahead inflation rate rose to 5.1%, with increases reported across age, income, and education, according to the report. Last month, long run inflation expectations fell below the narrow 2.9-3.1% range for the first time since July 2021, but since then expectations have returned to that range at 2.9%.

“After three months of expecting minimal increases in gas prices in the year ahead, both short and longer run expectations rebounded in October,” Hsu noted.

On Friday, the National Retail Federation reported that core retail sales rose 0.3% from August.