Consumer Optimism Picks Up In October
Consumer optimism appears to be rebounding in October, reports the University of Michigan’s Institute for Social Research (ISR) in its Survey of Consumers. The ISR’s preliminary Consumer Sentiment Index for October is 92.1, up from 87.2 in its September 2015 survey.
“The rebound in confidence signifies that consumers have concluded that the fears expressed on Wall Street did not extend to Main Street,” says Richard Curtin, chief economist of the ISR’s Surveys of Consumers. “Importantly, the renewed confidence did not simply represent a relief rally, but instead reflected renewed optimism. Personal financial expectations rose to their highest level since 2007, as did consumers’ views toward purchases of durable goods. While consumers anticipate a continued economic expansion, many expected strong headwinds from falling commodity prices, weakened economies in China and elsewhere as well as continued stresses on European countries. Perhaps the most important finding is that low inflation and continued job growth have enabled consumers to adapt to a slower and more variable rate of economic growth by varying the pace of their spending without losing confidence that the expansion will continue. Overall, the data still indicate that consumption will expand at 2.9 percent during 2016.”
In its September Consumer Sentiment Index, the ISR concluded that Americans understand that the stock market declines had more to do with international conditions than the domestic economy. The ISR’s September Sentiment Index was at the lowest level in 11 months, but it was still higher than in any prior month since May 2007. Its October figures are in line with this trend, and the ISR says overall, its data indicates that consumer spending will continue to expand in late 2015 and 2016,.
In September, the ISR noted a high proportion of consumers remarked on negative reports about stock prices or international and trade concerns in the current mix of economic news. These issues were cited in September’s survey by one in four households.
Established in 1948, the Institute for Social Research (ISR) at the University of Michigan conducts the University of Michigan Surveys of Consumers, the American National Election Studies, the Monitoring the Future Study, the Panel Study of Income Dynamics, the Health and Retirement Study, and the National Survey of Black Americans and the World Values Surveys. ISR is also home to the Inter-University Consortium for Political and Social Research (ICPSR), the world’s largest computerized social science data archive.