US consumer sentiment this month rose to its highest level since April, while long-term inflation expectations eased, final results from the University of Michigan's Surveys of Consumers showed Friday. The main sentiment gauge increased to 70.5 in October from 70.1 last month, according to the survey.
The consensus was for a 69.1 print in a survey compiled by Bloomberg. Annually, sentiment was up nearly 11%. Sentiment grew for the third straight month in October, due mainly to modest improvements in buying conditions for durables amid easing interest rates, Surveys of Consumers Director Joanne Hsu said. The index for current economic conditions increased 2.5% sequentially to 64.9 this month, while the expectations measure fell 0.4% to 74.1, the survey showed.
"The upcoming election looms large over consumer expectations," Hsu said. The US presidential election is scheduled for Nov. 5, with Democratic Party nominee and US Vice President Kamala Harris competing with Republican Party nominee and former US President Donald Trump. Overall, the share of consumers expecting a Harris victory dropped to 57% this month from 63% in September, according to Hsu. "Sentiment of Republicans, who believe that a Trump presidency would be better for the economy, rose 8% on growing confidence that their preferred candidate would be the next president," Hsu said.
"In contrast, sentiment declined 1% for Democrats." A sizable share of consumers are expected to update their economic projections based on the election results irrespective of the winner, according to Hsu. Year-ahead inflation expectations held steady at 2.7% this month, while the five-year price growth outlook eased to 3% from 3.1% in September, according to the survey. US consumers' inflation expectations increased at the medium- and long-term horizons in September, the Federal Reserve Bank of New York said last week..