Sentiment Declines as Inflation Expectations Rise
From U.Michigan, preliminary results for September: Figure 1: U.Michigan Consumer Sentiment, adjusted using Cummings-Tedeschi correction (blue, left scale), expected 1 year inflation, % (brown, right scale). Red dashed line at “Liberation Day”, purple dashed line at US-Iran war. Source: U.Michigan, Cummings and Tedeschi (2024), author’s calculations. After incorporating the Cummings-Tedeschi…
U.S. consumer sentiment declined in September, with preliminary data indicating a drop in expectations for future inflation, according to the University of Michigan's latest survey. The survey, which adjusts for inflation expectations using the Cummings-Tedeschi correction, showed a decrease in both overall sentiment and the expected one-year inflation rate.
The adjustment reveals that the Michigan survey falls between the Conference Board and Gallup measures when standardized, suggesting a consistent downward trend. The data also highlights the impact of significant events, such as the "Liberation Day" and the ongoing US-Iran war, on consumer sentiment. Despite these challenges, the survey indicates that consumer sentiment and confidence continue to follow the downward trajectory observed in August's numbers.
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