Preliminary data released by the University of Michigan on Friday (12th) showed that as inflation showed signs of cooling, the consumer confidence index continued to climb from a record low in June in August, beating market expectations and hitting a 3-month high. At the same time, short-term inflation expectations fell, but long-term inflation expectations unexpectedly climbed.
The U.S. University of Michigan’s consumer confidence index in August reported a preliminary value of 55.1, an estimate of 52.5, and the previous value of 51.5. In terms of other sub-indexes, the initial value of the current situation was reported at 55.5, which was lower than the expected 57.8 and lower than the previous value of 58.1; the initial value of the expected index was reported at 54.9, much higher than the expected 48.5, and the previous value was only 47.3.
In terms of inflation expectations, which have attracted much attention from the market, the initial value of inflation expectations in August 1 was 5%, the market expected 5.1%, and the previous value was 5.2%. Earlier this year, the short-term inflation forecast hit 5.4 percent, the highest level since 1981.
The initial median of 5-10-year inflation expectations is 3%, higher than market expectations of 2.8%, and an increase from the previous value of 2.9%; the average expected increase is more significant, from 3.4% to 4.0% , back to an all-time high.
In the past year or so, the median 5-year inflation expectation of Michigan University has been within a narrow range of 2.9%-3.1%, while the initial value in June once broke this range and reached 3.3%, a new high since 2008, attracting market attention. , believes that the city’s long-term inflation expectations are loose, but then driven by the Federal Reserve’s aggressive interest rate hikes, the 5-year inflation expectations fell, and even fell below the 2.9%-3.1% range for a while, making inflation expectations Fears that it could get out of hand have largely eased. But the latest data show that long-term inflation is showing signs of rising again.
Regarding the above inflation expectations, market analysis pointed out that this is not a report that can comfort the Fed. Although it will not bias the September meeting to raise interest rates by 3 yards (75 basis points), it does indicate that it is obviously too early to announce a victory over inflation. .
In addition, inflation expectations for U of M’s consumer sentiment were not in line with the Fed’s survey earlier this week. According to a survey by the Federal Reserve Bank of New York, consumers’ inflation growth expectations for the next 100 million years fell to 6.22% in July from 6.78% in June, the lowest since February this year and the fastest decline in inflation expectations on record. moon. Over the medium term, consumer expectations for inflation three years from now fell to 3.18%, the lowest since April 2021.
The University of Michigan report also shows that while consumer optimism has improved, purchasing conditions have not. Inflation continues to weaken popular shopping sentiment, and purchasing conditions for most major purchases (houses, cars, large durable goods) are still in or near all-time lows.
Consumer confidence affects economic growth in the coming months, pessimism will dampen spending levels, which will affect the economy, and optimism will help the economy going forward.