The consumer sentiment survey conducted by the University of Michigan had two different sections working against each other, causing the preliminary results for September to remain unchanged from August.
The Index of consumer sentiment remained unchanged in September at 89.8. While there was no monthly change, it did increase 3% from last year.
“The University of Michigan measure of consumer confidence was unchanged at a five-month low of 89.8 in September, although it is still at a level that, historically has been consistent with real consumption growth of around 4% annualized,” Capital Economics Economist Andrew Hunter.
The current economic conditions decreased 3.3% from 107 last month to 103.5. This is still up 2.3% from last year’s 101.2.
The index of consumer expectations increased 3% from 78.7 last month to 81.1. This is also an increase of 3.7% from last year’s 78.2.
“Confidence was unchanged in early September from the August final and barely different from the July reading,” said Richard Curtin, Survey of Consumers chief economist. “Small and offsetting changes have taken place in the third quarter 2016 surveys: modest gains in the outlook for the national economy have been offset by small declines in income prospects as well as buying plans.”
An article by Jill Mislinski for Advisor Perspectives explains what this means historically:
The Michigan average since its inception is 85.4. During non-recessionary years the average is 87.6. The average during the five recessions is 69.3.
“While income gains expected during the year ahead have edged upward, declines in inflation expectations were the main reasons future financial prospects improved, as both near and long term inflation expectations fell to near record lows,” Curtin said. “Nonetheless, buying plans suffered from the perception that no additional price discounts would be offered.”
“Even the more optimistic outlook for the economy had little if any impact on the expected growth rate in new jobs,” he said. “Importantly, all of these changes were relatively minor. Overall, consumers remain reasonably optimistic about their economic prospects. Real personal consumption expenditures can be expected to grow by 2.6% through mid 2017.”