Consumer Sentiment Rises Less Than Expected in October
Consumer sentiment rose less than forecast in October as Americans viewed buying conditions as less favorable than they did earlier in the month.
The University of Michigan’s final index for the month increased to 90 from 87.2 in September. The median forecast in a Bloomberg News survey called for a reading of 92.5 after a preliminary measure of 92.1.
The smaller gain from a month earlier masked more optimism about the outlook for household finances as projections of price increases in the next five to 10 years matched the lowest on record. Cheaper goods, low borrowing costs and a faster pace of disposable income in the third quarter could set the stage for further gains in consumer spending through year-end.
“Future financial prospects were viewed more favorably by all households than any time since 2007, as the expected long-term inflation rate dropped to the lowest level in over a quarter century,” Richard Curtin, director of the Michigan Survey of Consumers, said in a statement.
Estimates of the 58 economists in the Bloomberg survey ranged from 90.1 to 95. The gauge averaged 93.5 this year through September, and 84.1 in 2014.
The Michigan sentiment survey’s index of expectations six months from now rose to 82.1 from 78.2 last month. The initial reading was 82.7.
The gauge of current conditions, which measures Americans’ views of their personal finances, increased to 102.3 in October from 101.2 a month earlier. The preliminary figure was 106.7.
Over the next five to 10 years, households expect a 2.5% rate of inflation, matching September 2002 as the lowest on record. It was down from 2.7% the previous month. The preliminary estimate was 2.6%. Americans expected an inflation rate of 2.7% in the next year, compared with 2.8% in September.
In response to a special question, consumers were slightly more willing in October to borrow or use savings to make major purchases, the report showed Oct. 30.
