By Xavier Fontdegloria
U.S. consumer sentiment edged up in September to its highest level in five months as the decline in energy prices lead to easing inflation expectations.
The final estimate of the consumer sentiment index published Friday by the University of Michigan increased to 58.6 in September from 58.2 in August. However, the index fell compared with the mid-month preliminary reading of 59.5.
Economists polled by The Wall Street Journal expected consumer sentiment to be unchanged from the preliminary estimate.
Buying conditions for durable goods and the one-year economic outlook continued to recover from the extremely low readings earlier in the summer, but these gains were largely offset by modest declines in the long-run outlook for business conditions, said Joanne Hsu, the survey's director.
Despite the recent improvements in the index, confidence among U.S. consumers remains at historically subdued levels amid concerns over inflation and an economic slowdown. U.S. inflation eased slightly to 8.3% in August from 8.5% in July.
"Sentiment for consumers across the income distribution has declined in a remarkably close fashion for the last six months, reflecting shared concerns over the impact of inflation, even among higher-income consumers who have historically generated the lion's share of spending," Ms. Hsu said.
Americans' inflation expectations in the short-term fell in September for the third consecutive month. Americans expect prices to increase 4.7% in the next year, down from 4.8% in August and the lowest level since September 2021.
Expectations for inflation for the next five years, a closely watched indicator for Federal Reserve's officials, declined to 2.7% from 2.9% the prior month. This is the first time since July 2021 that long-run inflation expectations fall below the range between 2.9% and 3.1%.
"Inflation expectations are likely to remain relatively unstable in the months ahead, as consumer uncertainty over these expectations remained high and is unlikely to wane in the face of continued global pressures on inflation," Ms. Hsu said.
In September, the index measuring Americans' assessment of the current economic conditions increased to 59.7 from 58.6 in August, above the preliminary early-month reading of 58.9.
The index of consumer expectations--which reflects the balance of respondents anticipating improved business conditions in the next six months--was unchanged at 58.0, erasing the gains in the preliminary estimate, which came in at 59.9.
Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
(END) Dow Jones Newswires
09-30-22 1032ET
