Consumers are feeling better about the economy in September, according to the Survey of Consumers conducted by the University of Michigan.
The Index of Consumer Sentiment increased 1.6% from August and 4.6% from last year to 91.2.
This increase is good news after the survey’s preliminary September results showed no change from August.
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.
“Confidence edged upward in September due to gains among higher income households, while the Sentiment Index among households with incomes under $75,000 has remained at exactly the same level for the third consecutive month,” said Richard Curtin, Survey of Consumers chief economist.
“Importantly, the data provides no evidence of an upward trend as the average level of the Sentiment Index since the start of 2016 is nearly identical with the September level, 91.4 versus 91.2,” Curtin said.
The Index of Consumer Expectations showed the most gain with an increase of 5.1% from August and 5.8% from September 2015 to 82.7.
On the other hand, Current Economic Conditions decreased 2.6% from last month to 104.2. This is still an increase of 3% from last year.
“All of the September gains were concentrated in the Expectations Index, while assessments of current economic conditions were slightly less favorable,” Curtin said. “Fewer reports of recent income gains were counterbalanced by an uptick in income gains expected during the year ahead.”
“The larger recent gains among upper income households was partly due to continued declines in their inflation expectations,” he said. “Buying plans edged downward mainly due to the declining availability of price discounts. Real personal consumption expenditures can be expected to increase by 2.7% through mid 2017.”
While this survey showed only a slight increase, another measure of optimism, consumer confidence, hit its highest level in nine years, right about when the last recession began, according to the Consumer Confidence Survey conducted by The Conference Board by Nielsen, a provider of information and analytics around what consumers buy and watch.