Survey Says Consumers Gaining Confidence
Contrary to expectations that consumer attitudes would be stuck in neutral, sentiment shifted gears and moved higher nearly 5 points to 70.2 in September.
“Although the 4.5-point jump was not enough to erase the prior two monthly declines (totaling 5.1 points), that's pretty darn impressive, particularly with the high rate of joblessness, said economist Jennifer Lee from BMO Capital Markets. She attributed the gain to a bottoming out in home prices as well as recent highs in the stock market.
Confidence for current conditions is improving for the time in three months, according to the survey from Reuters and the University of Michigan, while six-month expectations rose for the second straight month. The current conditions index rose from a devilish 66.6 to 71.8 in the month, while consumer expectations climbed from 65.0 to 69.2.
TD analyst Ian Pollick called the report “consistent with other cheerful measures of U.S. economic data,” but he cautioned against optimism of future gains. “With a soft labor market and continued recessionary headwinds, a drastic improvement in the level of the index is likely not to materialize until these variables improve markedly.”
The US dollar is treading at 2009 lows and gold has been trading about $1,000 an ounce recently, but consumer reported no increased concern for inflation. One-year expectations for inflation fell two basis points to 2.6%, the lowest since March, while five-year expectations ticked up to 2.9%.
Treasuries rallied on the data. The benchmark 10-year yield is now trading at 3.31% after closing at 3.34% on Thursday.
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