Consumer Sentiment Rose 8.5% to 80.4 in September

Ann Arbor, MI, October 2, 2020-Consumer sentiment rose 8.5% to 80.4 in September, according to final results from the University of Michigan.

This represents a 13.7% decline year over year.

“Consumer sentiment continued to improve in late September, with the Sentiment Index reaching its highest level in six months,” says Survey of Consumers chief economist Richard Curtin. “The gains were mainly due to a more optimistic outlook for the national economy. While consumers have anticipated gains in the national economy ever since the April shutdown, the September survey recorded a significant increase in the proportion that expected a reestablishment of good times financially in the overall economy. The recent gains are encouraging even though they were largely due to upper income households. Indeed, the data indicate that lower income households face continued income and job losses compared with the modest gains expected by upper income households. Without a renewed federal stimulus and enhanced unemployment payments, the income gap will widen. The economy will benefit from the increasing pace of spending among households with incomes in the top third. Nonetheless, two non-economic issues still represent the primary source of uncertainty and could cause volatile shifts in consumer confidence: when and how the election is decided, and delays in obtaining a vaccine and its widespread availability. Although the survey was completed before the presidential debate, it is likely that the chaotic debate has already added to these uncertainties.

“Opinions about economic policies that would reduce inequality by raising taxes on the wealthy and a universal basic income were included in the September survey (see the chart). Rather than focus on policy preferences, the questions focused on the impact of these policies on the overall economy. In response, nearly half of all consumers (47%) thought higher taxes on the wealthy would have a favorable impact on economic growth prospects, and nearly half (48%) thought a universal basic income would have a negative impact on the economy.”