Washington.- Americans’ outlook for the economy improved for a second straight month in September, boosted by falling prices for durable goods such as cars and furniture and the prospect of a Federal Reserve rate cut.
The University of Michigan’s consumer confidence index rose to 69 in its preliminary reading, its highest level since May and up from 67.9 in August. The gain was driven by consumer perceptions that prices for durable goods have improved, according to the University of Michigan report.
The survey bottomed out in June 2022, when inflation peaked at 9.1%, and has since risen by 40%, though it remains below pre-pandemic levels. The long-term average of the index is nearly 85, according to Capital Economics.
“Consumers remain cautious as the looming election continues to generate substantial uncertainty,” said Joanne Hsu, director of consumer surveys at the University of Michigan.
Hsu added that “a growing share of Republicans and Democrats now anticipate a Harris victory.” The poll was conducted before Tuesday’s debate. Consumer confidence rose among Democrats but dipped slightly among independents and Republicans.
The share of consumers expecting interest rates to decline over the next 12 months rose to 54%, the highest level since 1978. The Fed is set to cut its interest rate by at least a quarter point next week.
Rising consumer confidence can sometimes signal a greater willingness to spend, though Americans have largely continued to spend at a healthy pace even though their confidence, as measured by surveys, has been subdued.
The economy expanded at a solid 3% annual rate in the April-June quarter, and retail spending picked up in July. But Americans are saving less and piling up more credit card debt, raising concerns among some economists that consumers will soon have to cut back, potentially slowing growth.
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