USA consumer sentiment has just posted a massive rebound in early October, a surge in confidence that suggests that it’s possible a big surge is around the corner.
Advertisement
For those reasons, there are still underlying worries in manufacturing and the rest of the industrial sector, but the rebound in consumer sentiment – announced on Friday – shows that there is a lot of domestic demand, and strong consumer spending could cause economic growth to head upward even with those underlying problems.
Economists estimate that the preliminary consumer sentiment index for October was 89, according to Bloomberg.
Wall Street is hoping the US market’s 8%-plus rally off of its August lows was good enough news to get consumers feeling good about the future again.
The sub-index gauging consumer expectations for six months from now, which more closely projects the direction of consumer spending, rose to 82.7 from 78.2 in September.
The University of Michigan said the preliminary reading on its consumer sentiment index for October came in at 92.1 compared to the final September reading of 87.2. The economy has slowed down slightly in the past few months. With lower gasoline prices for past more than a year, most of the consumers have extra savings on their fuel bills.
“Consumers have concluded that the fears expressed on Wall Street do not extend to Main Street”, read the prepared comments of Michigan Survey of Consumers director Richard Curtin. Still, the weak industrial production report added to soft trade, retail sales and employment data that have pointed to a significant slowdown in growth after the economy expanded at a 3.9 percent annual pace in the second quarter.
Consumer was more optimistic about personal financial expectations than at any time since 2007.
Advertisement
“We take a positive signal from these data and view them as supportive for our expectation that consumption growth will continue to outperform”, said Jesse Hurwitz, economist at Barclays.
