After reporting an unexpected increase in U.S. consumer sentiment in the previous month, the University of Michigan released a report on Friday showing consumer sentiment continued to improve in the month of September.
The preliminary report said the consumer sentiment index climbed to 78.9 in September from 74.1 in August. Economists had expected the index to show a much more modest uptick to 75.0.
The index reached its highest level since March but is still well below the pre-pandemic reading of 101.0 seen in February.
The much bigger than expected increase by the consumer sentiment index reflected improvements in consumers’ assessment of current conditions as well as their outlook for the future.
The current economic conditions index jumped to 87.5 in September 82.9 in August, while the index of consumer expectations surged up to 73.3 from 68.5.
“Over the next several months, there are two factors that could cause volatile shifts and steep losses in consumer confidence: how the election is decided and the delays in obtaining vaccinations,” said Surveys of Consumers chief economist Richard Curtin.
He added, “While the end of the recession will depend on these non-economic factors, the hardships endured by consumers can only be offset by renewed federal relief payments.”
On the inflation front, the report said one-year inflations expectations tumbled to 2.7 percent in September from 3.1 percent in August, while five-year inflation expectations edged down to 2.6 percent from 2.7 percent.
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