Most Americans took a slightly dimmer view of the U.S. economy in September but buoyant Democrat feelings led consumer sentiment to inch higher.
The University of Michigan’s consumer sentiment index ticked up to 69 in its preliminary September reading, the best score since May and 1.6 percent higher than the prior month’s reading.
The rise in consumer sentiment, however, was confined to Democrats and their view about current economic conditions. The consumer sentiment index for Democrats rose to 92.6 from 90.9, with the current conditions gauge climbing to 90.8 from 86.1 and the expectations measure dipping slightly to 93.7 from 94.
Among independents, the all-in sentiment index inched down from 62.2 to 62.0. The current conditions measure declined to 58 from 59.3 and the expectations index moved up to 64.5 from 64.1.
There was a small slide among Republicans as well, with the overall index moving down to 47 from 47.4. The reading of current conditions declined to 32.6 from 33.5 and the expectations index was unchanged at 56.3.
The survey shows that sentiment is far below where it was in September 2020, explaining why so many voters answer negatively when asked if they are better off than they were four years ago. In September 2020, the index rose to 80.4 from the prior month’s reading of 74.1. At the lowest point during the pandemic year, the index dropped to 71.8, four percent higher than it is now.
Compared with one year ago, sentiment is up 1.8 percent. The current conditions index, however, is down 11.5 percent while the expectations index is up 11.6 percent,.
The September gain was driven by perceptions of improved buying conditions for durable goods, driven by more favorable views of prices, according to the University of Michigan.
The election is weighing on expectations.
“Consumers remain guarded as the looming election continues to generate substantial uncertainty,” said Joanne Hsu, director of consumer surveys at University of Michigan.
According to Hsu, both Republicans and Democrats now anticipate win by Kamala Harris—a reversal from earlier this summer when Donald Trump was seen as likely to defeat Joe Biden. The interviews for this month’s preliminary survey were conducted prior to the debate.
