US consumer moods brighten, among Republicans in particular
2024.10.25 11:52
(Reuters) – U.S. consumer sentiment climbed to a six-month high in October as declining interest rates helped improve buying conditions for big-ticket items like cars, but the uptick was most pronounced among Republicans who grew more confident in their party regaining the White House in the Nov. 5 presidential election.
The University of Michigan’s Consumer Sentiment Index rose to 70.5 this month, the highest since April, from a final reading of 70.1 in September. The result topped the median estimate among economists polled by Reuters for a reading of 69.0 and also legged up from a preliminary figure of 68.9 two weeks ago.
As has been the case for several years now, though, details of the report showed a wide partisan skew. In October it was consumers who identified as Republican and to a smaller degree independents who led the overall increase in sentiment, while sentiment among self-identified Democrats declined.
“The upcoming election looms large over consumer expectations,” survey Director Joanne Hsu said in a statement on Friday.
Sentiment among Republicans rose by 7.8%, the most since February, and among independents it rose by 4.1%, the most since January. Democrat sentiment meanwhile fell for the first time since July, declining 1.3%.
Hsu said Republicans have grown more confident that their nominee, former President Donald Trump, will prevail over Vice President Kamala Harris, the Democratic nominee, in an election now less than two weeks away. Polls show the race has narrowed to a toss-up, and Hsu said their results show the share of consumers who expect a Harris victory has fallen to 57% from 63% in September.
Households’ views on the trajectory of inflation have flattened out, a development that will be welcome at the Federal Reserve as it carries out its pivot from the high interest rates it used to combat high inflation in the years immediately after the pandemic.
Year-ahead inflation expectations of 2.7% in October were unchanged from September’s reading and have settled into the range of 2.3%-3.0% that prevailed in the two years prior to the pandemic. Longer-range inflation expectations eased back to 3.0% from 3.1%.
The Fed, which cut rates for the first time in four years in September by half a percentage point, next meets in the two days immediately after the election. Officials are expected to deliver a second cut, but by a smaller quarter-point margin.
