The University of Michigan index of consumer sentiment was revised up in the final September estimate, to 87.2 from the mid-month preliminary estimate of 85.7. The revision was in line with forecast (87.0) and modestly above consensus expectations (86.5). The current conditions index was revised up to 101.2 (initial: 100.3, previous: 105.1), and the expectations component was marked higher to 78.2 (initial: 76.4, previous: 83.4).
Inflation expectations fell a bit from the mid-month estimates, with year-ahead expectations easing to 2.8% (initial: 2.9%) and longer-term expectations at 2.7% (initial: 2.8%). This morning's survey details and commentary confirm that the September decline in sentiment was attributable to financial markets and concerns about international economic developments; negative economic news was reported by 68% of consumers (previous: 58%). These concerns fed through consumers' perception of both current conditions and expectations, but affected current conditions more noticeably. Current personal finances fell to 111 (previous: 120), while expected personal finances fell less, to 121 (previous: 124).
"Interestingly, the decline in overall sentiment was led by consumers in the bottom two-thirds of the income distribution. The drop poses modest downside risks for consumer spending; however, buying conditions for durables (151, previous: 152) in the consumer sentiment survey were little changed on the month. The actual spending data we have in hand through August suggest that spending remains solid, and we do not expect a sharp deterioration", says Barclays
