Aug. 25 (UPI) — The University of Michigan reported on Friday that U.S. consumer sentiment in August remained largely unchanged, demonstrating resilience in optimism despite persistent inflationary pressures.
According to the university, the final gauge of consumer sentiment for August, which was released, indicated that the sentiment “moved sideways” and did not show any significant statistical difference from the previous month.
“Consumers perceive that the rapid improvements in the economy from the past three months have moderated, particularly with inflation, and they are tentative about the outlook ahead,” said Joanne Hsu, the survey’s director.
The final reading on consumer sentiment slightly declined from July but remains almost 20% higher compared to the same period last year. However, there is a slight souring of mood. The final results for consumer sentiment in June revealed an 8.8% increase in confidence from the previous month and a 28.8% increase from June 2022.
Looking forward, consumers stated that they expected inflation to reach 3.5%, a slight increase of 0.1% from July, but overall they were positive and optimistic.
“Sentiment reached its second highest reading in 21 months, now about 39% above the all-time historic low reached in June of 2022,” added Hsu. “While buying conditions for durables and expectations over living conditions both improved, the long-run economic outlook fell back about 12% this month, but it’s still higher than just two months ago.”
This reading comes after Federal Reserve Chairman Jerome Powell’s pivotal speech at the economic symposium in Jackson Hole, Wyoming. Powell stated that although inflation has moderated from its peak levels last year, it still remains relatively high.
“Additional evidence of persistently above-trend growth could put further progress on inflation at risk and could justify further tightening of monetary policy,” he added.
James Knightly, the chief economist at investment bank ING, believes that the combination of higher lending rates and the end of pandemic-era stimulus should warrant a pause.
“We think rates have peaked and expect cuts to come in 2024,” he said.
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