Consumer sentiment improved last month but remains historically weak, according to the University of Michigan’s widely tracked monthly survey released Friday morning, one of the last major indicators of Americans’ lukewarm feelings on the economy and their finances ahead of November’s presidential election.
Shoppers at a San Jose mall.
The preliminary Sept. reading of the monthly survey was 69, topping August’s final reading of 67.9 and average economist forecasts of 68.2, according to FactSet, the strongest level of sentiment since May.
In perhaps the biggest bright spot from the survey, the median year-ahead inflation expectation slipped to 2.7%, the lowest level since Dec. 2020.
The phone poll, conducted monthly since 1978, tracks respondents’ answers to a variety of questions taking their temperature on the economy and assessments of their own prospects, analyzing perceptions of items like inflation, unemployment and the housing and stock markets.
Though this month’s reading is the highest level much higher than the all-time low of 50 set in June 2022, which outpaced levels set during the Great Recession and the early 1980s inflation crisis, it continues the trend of downtrodden attitudes among Americans.
Crucially, the lingering low sentiment coincides with elevated inflation during President Joe Biden’s presidency: The Michigan sentiment index was 79 when Biden took office in 2021, and sits lower than it ever was under Donald Trump (71.8 in April 2020). Sentiment decreased by a greater margin than under Biden, as the Michigan metric declined from 98.5 to 79 from Jan. 2017 to Jan. 2021. But the steadily low confidence expressed in the poll over the last 3.5 years supports reports suggesting Americans believe their wallets would be fatter under Trump than they’d be under the Democratic nominee, Vice President Kamala Harris. A CNBC survey last month released last month found 40% of voters thought they’d be better off financially under Trump compared to 21% for Harris.
Presidential actions have far less of an impact on the economy than public perception may suggest, according to economists. That’s because it’s far from the presidential seal of approval that could instantly solve global inflation originally tied to COVID-19 outbreaks among supply chain workers or take responsibility for stock market gains from artificial intelligence breakthroughs. The economy is by far the top voter issue this fall. Inflation has moderated significantly from the 41-year high it touched in 2022, hitting its lowest level last month since early 2021, and the stock market sits near its highest level on record, with the S&P 500 delivering a historically robust 15% annualized return over the last five years, but decreased spending power and dwindling savings rates have contributed to the malaise.