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A customer looks at an LG washer and dryer at the RC Willey home furnishings store in Draper, Utah, USA on Monday, August 28, 2023.
Washington DC
CNN
—
gas price rise The latest survey of consumer sentiment from the University of Michigan shows that U.S. consumers have yet to be hit by a wave of optimism that inflation is easing.
The university’s latest consumer survey, released Friday, shows that Americans expect inflation rate Interest rates for the next 12 months fell to 3.1% in September from 3.5% the previous month, “the lowest level since March 2021 and slightly above the 2.3-3.0% range seen in the pre-pandemic two years. “Ta”. to the statement.
Meanwhile, inflation expectations over the next five to 10 years fell to 2.7%, “for the second time in the past 26 months that they have fallen below the narrow range of 2.9% to 3.1%.”
This is welcome news for the Fed, which is closely monitoring Americans’ views and expectations about inflation as it battles historic inflation. Americans seem confident that inflation will fall to historically experienced levels, but as consumers become accustomed to higher prices, the Fed’s job of reining in inflation will be complicated.
“A decline in inflation expectations over the next five to 10 years…is a very welcome development,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in an analyst note. “We have long argued that the apparent downward revision in inflation expectations was premature. This decline is a major step towards normalization,” he said.
Shepherdson cautioned that the latest readings are preliminary, but said “the final readings could be revised upwards as people react to higher gas prices.” But so far it looks good. ”
gas price is a very visible indicator of inflation, and rising prices can easily worsen consumer mood. Last summer, when gas prices topped $5 a gallon and inflation hit a 40-year high, sentiment fell to record lows. The national average for regular gasoline on Friday was $3.87 per gallon, 7 cents higher than a week ago and 17 cents higher than the same day last year, according to AAA.
Overall consumer sentiment in September, surveyed by the University of Michigan, fell 1.8 percentage points from the previous month, largely due to pessimism about the current state of the economy. The survey’s index of current economic conditions deteriorated from 75.7 in August to 69.8 this month.
Although Americans’ views about the future of the economy improved somewhat in September, consumers are not necessarily optimistic, and concerns are beginning to surface. Possible government shutdown.
“Both short- and long-term expectations for economic conditions improved modestly this month,” Joan Hsu, director of consumer research at the University of Michigan, said in a release.
“Online, consumers remain relatively cautious about the trajectory of the economy. So far, few consumers have mentioned the possibility of a federal government shutdown; “Consumer views of the economy are likely to decline, just as they did just a few months ago when the debt ceiling was about to be breached,” she said. She noted that consumer sentiment plummeted in May as lawmakers fought over raising the federal debt ceiling, nearly prompting the U.S. to default on its debt.
The combination of high gas prices and the government shutdown could weigh on Americans’ mood, but weak demand could cause gas prices to fall slightly in the fall.
“Oil costs are putting upward pressure on pump prices, but significant declines in demand are limiting increases,” AAA spokesman Andrew Gross said in a statement. “As schools reopen, days get shorter and the weather becomes less pleasant, fewer people are storing energy, which is typical. But the normal decline in pump prices has so far been hampered by these oil price spikes. It has been.”