University of Michigan’s consumer sentiment index drops in late August

The University of Michigan’s consumer confidence index dropped in late August from its mid-month level. The consumer sentiment index for the U.S. fell 0.8 points to 96.8 from 97.6. This is below the consensus expectations of 97.4. However, sentiment has still risen over the month, as expectations for future growth rose strongly.

This past year, consumer sentiment has risen strongly, aided by the buoyant stock market, rising home prices and generally improving economic conditions. Confidence rose 3.4 points from the prior month; however, it ended the month 0.8 percentage points below its mid-August level.

Hurricane Harvey might have influenced the late August data slightly and might almost assuredly bring down the September report, noted Wells Fargo in a research report. With household wealth continuing to advance from increasing stock prices and higher home values, a growing number of households are feeling better about their finances. The improvement should underpin strong gains in consumer spending.

A slightly larger share of households stated that they expected gasoline prices to increase in the next 12 months, but overall views on inflation continue to be near their cycle lows, stated Wells Fargo.

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