Consumer sentiment in the U.S. has unexpectedly improved in the month of October, according to a report released by Thomson Reuters and the University of Michigan on Friday.
The report said the preliminary reading on the consumer sentiment index for October came in at 86.4 compared to the final September reading of 84.6.
The modest increase came as a surprise to economists, who had expected the index to edge down to a reading of 84.0.
With the unexpected increase, Reuters said the consumer sentiment index rose to its highest level since July of 2007.
Rob Carnell, chief international economist at ING, “Recent stock market volatility may take some of the shine off sentiment by the time the final reading is out, but this is still a good reading and supportive of robust consumer spending in the months ahead.”
The unexpected increase by the headline index reflected another jump by the survey’s gauge of consumer expectations, which surged up to a two-year high of 78.4 in October from 75.4 in September.
Meanwhile, the survey’s barometer of current economic conditions came in at 98.9 in October, unchanged from the previous month.
The survey’s one-year inflation expectation fell to 2.8 percent in October from 3.0 percent in September, with the five-to-ten-year inflation outlook held steady at 2.8 percent.
Peter Boockvar, managing director at the Lindsey Group, said, “The Fed will say this drop in inflation expectations is worrisome, I say its welcome when incomes are growing no faster than 2%.”
In an interview with Bloomberg News on Thursday, St. Louis Fed President James Bullard suggested that the Fed should consider delaying the end of its asset purchase program to halt the decline in inflation expectations.
by RTT Staff Writer
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U.S. Consumer Sentiment Unexpectedly Climbs To Seven-Year High In October
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