Aug. 25 (UPI) — U.S. consumer sentiment in August was relatively unchanged, though optimism remains resilient despite lingering inflationary pressures, the University of Michigan reported Friday.
The university released its final gauge of consumer sentiment for August, saying the mood “moved sideways” but was not all that statistically different from the prior month.
“Consumers perceive that the rapid improvements in the economy from the past three months have moderated, particularly with inflation, and they are tentative about the outlook ahead,” Joanne Hsu, the survey’s director, said.
The final reading on consumer sentiment declined somewhat from July, but remains nearly 20% better than this time last year. Nevertheless, the mood is souring somewhat. Final results on consumer sentiment for June showed an 8.8% increase in confidence from the prior month and a 28.8% increase from June 2022.
Looking ahead, consumers said they expected inflation to reach 3.5%, a 0.1% increase from July, but were otherwise resoundingly upbeat.
“Sentiment reached its second highest reading in 21 months and is now about 39% above the all-time historic low reached in June of 2022,” Hsu added. “While buying conditions for durables and expectations over living conditions both improved, the long-run economic outlook fell back about 12% this month, but remains higher than just two months ago.”
The reading followed a pivotal speech from Federal Reserve Chairman Jerome Powell at the economic symposium at the Jackson Hole resort city in Wyoming. The Fed chief said inflation has moderated from peak highs last year, but was still too high.
“Additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy,” he added.
James Knightly, the chief economist at investment bank ING, said higher lending rates, combined with the end of pandemic-era stimulus should warrant a pause, however.
“We think rates have peaked and cuts will come in 2024,” he said.