September’s reading on consumer sentiment improved this month, compared with August, as Americans’ outlook on inflation brightened, according to the preliminary Reuters/University of Michigan consumer sentiment index.
The index came in at 73.1, up more than 10 points from 63 in August.
Consumers’ improving outlook coincides with declining producer prices — -0.9% — and tumbling energy prices — -4.6% — last month.
Their inflation outlook has also improved as the one-year expectation that inflation would worsen declined to 3.6%, from 4.8% in August.
Similarly, the five-year inflation expectation dropped to 2.9%, from 3.2%.
But the positive numbers may not forestall more economic distress as the numbers don’t jibe with negative economic data, said Brian Bethune, chief U.S. financial economist at Global Insight Inc. in Lexington, Mass.
“You’re getting a positive benefit from lower gas prices,” which takes some of the edge off of sentiment, but consumers aren’t fooled by that, he said.
“Consumers see other problems in the employment market and with their declining net worth,” Mr. Bethune said. “It’s not a positive environment for them.”
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