(Multibagger) - U.S. Consumers Expect Inflation to Moderate, University of Michigan Survey Shows
According to the latest University of Michigan survey, U.S. consumers anticipate inflation to continue moderating in the coming year. The gauge of price growth expectations hit its lowest level in August since late 2020, with households' one-year inflation expectation at 2.8%, down from 2.9% in July. The five-year outlook for price growth remained unchanged at 3.0%.
Moreover, the survey revealed a slight improvement in consumer sentiment this month, coinciding with the upcoming U.S. presidential election on Nov. 5. The overall sentiment index rose to 67.9 in August from July's low of 66.4, breaking a four-month decline. The increase was mainly driven by political independents, as Democrats and Republicans balanced each other out.
Director of the University of Michigan's Surveys of Consumers, Joanne Hsu, noted the significant shift in sentiment among Democrats and Republicans, attributing it to the changing election expectations. Vice President Kamala Harris is now the Democratic presidential candidate, following President Joe Biden's decision to step aside, leading to a shift in consumer expectations. In July, data showed more consumers expected Republican nominee Donald Trump to win, but now the majority anticipate a win for Harris.
**Analysis:**
The University of Michigan survey indicates that U.S. consumers are optimistic about inflation moderating in the near future. This positive sentiment is also reflected in the slight improvement in overall consumer sentiment, particularly among political independents. The changing election expectations, with Vice President Kamala Harris now leading the Democratic ticket, have influenced consumers' views on the outcome of the upcoming presidential election. This shift in sentiment could have implications for financial markets and consumer behavior in the coming months.