Less Affluent Households Give Consumer Sentiment a Boost September's unexpected rise in consumer sentiment to a final reading of 68.2, up from the preliminary September reading of 66.6, is good news, but it comes with a lot of qualifiers.

Sentiment rose in late September and was higher than predicted by the economists surveyed by Bloomberg, who had forecast a final reading of 67 for the month, but it's still slightly lower than August's 68.9 reading, and substantially lower than the 76.0 high reached in June. In addition, September's consumer sentiment numbers varied substantially depending on the incomes of the responders.

"The entire late September gain ... was among households with incomes under $75,000 while upper income households reported much less favorable economic prospects," Richard Curtin, director of surveys for the Thomson Reuters/University of Michigan Surveys of Consumers, told Reuters.

Curtin suggested that the split between the two income groups was partly due to concern over the failure of Republicans and Democrats to agree on an extension of the Bush tax cut for families with incomes higher than $250,000.

Economists, business executives, and policymakers monitor consumer sentiment because, historically, consumer attitudes have been correlated with consumer decisions to spend. In general, rising consumer sentiment leads to increases in consumer spending, or the maintenance of a level of spending, while falling consumer sentiment foretells the reverse. And historically, consumer spending has accounted for 65% to 70% of U.S. GDP.

August Personal Income, Real Consumer Spending Rise


Separately, the U.S. Commerce Department announced Friday that personal income rose 0.5% and real consumer spending increased 0.2% in August. Further, with income rising faster than spending, Americans were able to save more: The U.S. savings rate rose to 5.8% in August from 5.7% in July.

Returning to the final September consumer sentiment survey, the consumer expectations component rose to 60.9 from the 59.1 September preliminary reading. However, the component was still below August's 62.9 reading.

Also, the current conditions component rose to a final September reading of 79.6 from the 78.4 preliminary September reading, and above August's 78.3 tally.

In addition, the 12-month economic outlook rose to a final September reading of 61.0 from the 59.0 preliminary September reading. Even so, the September reading is eight points lower than August's 69.0 reading.

The one-year inflation outlook declined to 2.2% in September from 2.7% in August; the five-year inflation outlook dipped to 2.7% from 2.8%.

Taken together, the consumer sentiment and personal income/consumer spending reports show a U.S. consumer whose fiscal condition and attitude toward the economy are getting slightly better. Even so, both sentiment and spending remain at low levels. Economists will need to see a substantial reduction in the nation's 9.6% unemployment rate before they can feel confident that Americans' attitude toward the the economy and toward making purchases has improved in a sustained way.

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wfreeberg

Bearmaul, you might be surprised; I'm in my 68th year and still working, not because I have to but because I love it. I lived through the financial issues of the 70s and 80s; we survuved them and we'll survive this. I travel all over the country and I know ther are a number of states with low unemployment looking for skilled resources. An example; IBM opened an office in Dubuque, Iowa last year and hired 1000. That's not much improvement when one talks about millions unemployee but it's a positive move. Don't get me wrong; we have a problem. My point is you don't solve the problem by crying and waiting for a solution to come to you. If a person has been out of work for 99 weeks he/she should reexamine whether he/she has marketable skill sets and either find another trade/profession of move to where the skill set is marketable. DON'T BLAME OTHERS AND STOP CRYING.

October 01 2010 at 4:50 PM Report abuse rate up rate down Reply
1 reply to wfreeberg's comment
Bearmaul

Wow, is this what happens to a mind thats 68 years old? I'm 50 and I sure hope that I'm not as ignorant as your posts seems to suggest. My post is about not trusting what you see or hear or read in the media and somehow you took from that that I'm crying and blaming others and should look for other marketable skills, what would you have me do, give up my small business and rental properties to go in search of ignorance, maybe I don't want to, I like being a thinking adult who knows how to read and most importantly how not to read into other peoples messages things that are not there, like you just did, my grandfather and father were both sharp as a tack in their statesmen years, I suggest you go see a doctor and see if anything organic may be going on that can be slowed or reversed.

October 02 2010 at 5:28 AM Report abuse rate up rate down Reply
wfreeberg

A possitive sign; let's trash it. A negative sign; let's embrace it. I don't know where you all live but it must be depressing; move out of your location and circle of friends. Go to somewhere positive; you'll live longer. By the way, there are a number of states where unemployment runs below 7%

October 01 2010 at 1:30 PM Report abuse rate up rate down Reply
1 reply to wfreeberg's comment
Bearmaul

Everyone has a choice (so far) on what or what not to believe, you choose to believe the drivel given up by the news media is fine, I've been around too long to believe in fairy tales, when you get older or decide to open your mind up and question the things being displayed, then you may have a different opinion.

October 01 2010 at 2:13 PM Report abuse +2 rate up rate down Reply
Hi Gram, Ty&Dill

Where does this guy get this stuff? Just who is it that takes these surveys? I would like to see one participant reply on this comments board and verify that any such survey takes place.It sounds like alot of double talk and feel-good isms to me. Sure doesn't reflect how everyone I know feels.

October 01 2010 at 1:11 PM Report abuse +3 rate up rate down Reply
1 reply to Hi Gram, Ty&Dill's comment
Bearmaul

Was thinking the same after seeing septembers number was 666. My first thought was " This is made up."

October 01 2010 at 1:28 PM Report abuse +3 rate up rate down Reply