In August, U.S. consumer sentiment saw a notable rise, influenced by shifts in the political landscape as the race for the White House intensified, according to a survey released on Friday. The University of Michigan's preliminary index reading for consumer sentiment reached 67.8, up from 66.4 in July, exceeding the expectations of economists who had anticipated a slight increase to 66.9.
Impact of Presidential Race on Consumer Sentiment
The survey highlighted the significant impact of recent developments in the 2024 U.S. presidential election on consumer sentiment. Notably, sentiment among Democrats increased by 6% following President Joe Biden's decision to withdraw from the race and the subsequent emergence of Vice President Kamala Harris as the Democratic Party's presidential nominee. This marked the first rise in Democratic sentiment since March.
Conversely, sentiment among Republicans fell by 5% in August, reaching its lowest level since November of the previous year. Independent voters, whose economic views have aligned more closely with Republicans throughout the year, experienced a 3% rise in sentiment—the first increase since January.
Consumer Preferences on Economic Leadership
The survey also provided insights into consumer preferences regarding economic leadership. Among those surveyed, 41% viewed Kamala Harris as the better candidate for managing the economy, while 38% favored Republican nominee Donald Trump. This marks a shift from the May to July period, during which Trump held a five-point advantage over Biden in economic perception.
Joanne Hsu, director of the University of Michigan's Surveys of Consumers, commented on the findings, stating, "Overall, expectations strengthened for both personal finances and the five-year economic outlook, which reached its highest reading in four months, consistent with the fact that election developments can influence future expectations but are unlikely to alter current assessments."
Inflation Expectations Remain Steady
Despite the changes in consumer sentiment, inflation expectations for the next year and beyond remained steady. The survey reported that one-year inflation expectations held at 2.9% in August, consistent with July's reading. Similarly, the five-year inflation outlook remained unchanged at 3.0% for the fifth consecutive month.
This stability in inflation expectations contrasts with an alternative sentiment survey by the New York Federal Reserve, which earlier this week indicated that medium-term inflation expectations had eased substantially in July, even as near- and longer-term outlooks for price pressures remained steady.
(Source:www.investing.com)
Impact of Presidential Race on Consumer Sentiment
The survey highlighted the significant impact of recent developments in the 2024 U.S. presidential election on consumer sentiment. Notably, sentiment among Democrats increased by 6% following President Joe Biden's decision to withdraw from the race and the subsequent emergence of Vice President Kamala Harris as the Democratic Party's presidential nominee. This marked the first rise in Democratic sentiment since March.
Conversely, sentiment among Republicans fell by 5% in August, reaching its lowest level since November of the previous year. Independent voters, whose economic views have aligned more closely with Republicans throughout the year, experienced a 3% rise in sentiment—the first increase since January.
Consumer Preferences on Economic Leadership
The survey also provided insights into consumer preferences regarding economic leadership. Among those surveyed, 41% viewed Kamala Harris as the better candidate for managing the economy, while 38% favored Republican nominee Donald Trump. This marks a shift from the May to July period, during which Trump held a five-point advantage over Biden in economic perception.
Joanne Hsu, director of the University of Michigan's Surveys of Consumers, commented on the findings, stating, "Overall, expectations strengthened for both personal finances and the five-year economic outlook, which reached its highest reading in four months, consistent with the fact that election developments can influence future expectations but are unlikely to alter current assessments."
Inflation Expectations Remain Steady
Despite the changes in consumer sentiment, inflation expectations for the next year and beyond remained steady. The survey reported that one-year inflation expectations held at 2.9% in August, consistent with July's reading. Similarly, the five-year inflation outlook remained unchanged at 3.0% for the fifth consecutive month.
This stability in inflation expectations contrasts with an alternative sentiment survey by the New York Federal Reserve, which earlier this week indicated that medium-term inflation expectations had eased substantially in July, even as near- and longer-term outlooks for price pressures remained steady.
(Source:www.investing.com)
