The University of Michigan Consumer Sentiment Index rose month over month from a final August reading of 74.1 to September’s final level of 80.4. Economists polled by Bloomberg were expecting a final September reading of 79.0 after a preliminary monthly reading of 78.9. The final index reading in September of last year was 93.2.
Month over month, consumer sentiment rose by 6.3 index points. The percentage month-over-month increase in the score was 8.5% and the year-over-year decline was 13.7%.
The consumer expectations subindex increased month over month by 7.1 points, from 68.5 to 75.6 (up 10.4%)m while the current conditions subindex rose from 82.9 to 87.8 (5.9%).
Year over year, the current conditions subindex fell by 19.1%, and the consumer expectations subindex dropped by 9.4%.
The survey’s chief economist, Richard Curtin, noted that the September index reached its highest level in six months, primarily due to an optimistic outlook for the U.S. economy. The rosier outlook, however, was “largely due to upper income households.”
Curtin continued: “Indeed, the data indicate that lower income households face continued income and job losses compared with the modest gains expected by upper income households. Without a renewed federal stimulus and enhanced unemployment payments, the income gap will widen.”
Survey respondents in the top third of household incomes expect to be spending more on durable goods like appliances, furniture and electronics over the next few months. Home purchases are expected to remain strong as interest rates maintain their historic lows and home values continue rising.
Next month’s elections and the development and delivery of a vaccine for COVID-19 continue to drive uncertainty and “could cause volatile shifts in consumer confidence.”
This month’s survey asked survey respondents whether tax increases on the wealthy and a universal basic income were policies that would reduce inequality in the United States. Nearly half (47%) favored a tax on the wealthy while 48% thought a UBI would hurt the economy. A full quarter said a tax on the wealthy would make no difference while 15% said UBI would make no difference.
The employment situation report issued earlier Friday morning echoes the sentiments expressed by the University of Michigan’s survey: some parts of the population are recovering while other parts still suffer.