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October 11, 2019 Blog 1 min read
Despite the flood of negative headlines in recent weeks, consumer sentiment improved in October.

10-11-19 Consumer Sentiment Chart

Despite the flood of negative headlines in recent weeks, the consumer mood actually improved in October. The University of Michigan’s Consumer Sentiment index edged higher to 96.0 in October, easily beating expectations for a reading of 92.0, while rising from 93.2 in September.

Optimism about rising household income fueled the improvement in sentiment, as consumers largely shrugged off discussions of impeachment, ongoing uncertainty relative to trade policy, and some weaker economic data. The improvement reflected a better assessment of current economic conditions and a modestly more optimistic view for the economic outlook as well.

Impeachment talk may dominate some news outlets, but of the consumers surveyed, relatively few cited it as a source of concern. By nearly two to one, the GM strike was viewed as a larger concern – not surprising given the number workers directly impacted and the ripple effects that are negatively affecting suppliers and the surrounding communities.

Business confidence has been hampered by the persistent uncertainty around trade policy. For many businesses, that has required a retooling of supply chains, but has also significantly impaired business investment.

Although the situation has not been lost on consumers, they have not been as negatively impacted. Fueled by surprisingly resilient labor market conditions and better income growth, consumers have continued to spend. That spending has overwhelming been the primary driver for the economy in recent quarters. A more optimistic outlook should keep consumer pocketbooks open.

Indications that consumer expectations for stronger income gains in the coming year should help to keep the consumer train on the tracks. That bodes well for the economy; if it is going to be able to power through the current weakness, it will be the strength of the consumer sector that is the catalyst.


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