Consumer sentiment is on the rise this month, climbing to 84.6 versus a final August reading of 82.5 and a mid-month August reading of 79.2 – but buried in there is a decline in the current conditions component which suggests consumer activity won’t be up in September. 

The gain in sentiment, according to the index compiled by the independent research firm The Conference Board, is centered in the expectations component, not the current conditions component which slipped to 98.5 versus 99.8 in final August and 99.6 in mid-month August.

This report would have more bearing on the immediate outlook if it weren't for the softness in current conditions. Still, taken as a whole and together with Friday’s improved retail sales report, the consumer sector could be looking up.

The markets, however, are showing no significant initial reaction to today's report.

This gain may be tied in part to lower gasoline prices and lack of concern over inflationary pressures.

One-year inflation expectations are definitely coming down, to 3.0% versus 3.2% in final August and 3.4% at mid-month August. Five-year expectations are at 2.8%, down 1 tenth from final August and unchanged from mid-month August.