Consumer Sentiment ticked up 1.7 points in October to 81.8, according to the University of Michigan Consumer Sentiment Index. October’s figure is 14.3 points below the October 2019 index. The Current Economic Conditions Index fell 2.2 points to 85.9 and the reading was 24.1 points below the October 2019 index. The Consumer Expectations Index declined 4.8 points to 79.2 and was 5.9 points lower than a year ago.
“Consumer sentiment remained virtually unchanged from the first half of October (+0.6 points) and was insignificantly different from last month’s figure (+1.4 points). Fear and loathing produced this false sense of stability. Fears were generated by rising covid infection and death rates, and loathing was generated by the hyper-partisanship that has driven the election to ideological extremes. Moreover, the impact of the covid virus and the extremes of hyper-partisanship will continue long past next week’s election, with the potential to permanently alter the economic and political landscape. As noted when Trump won over Clinton in 2016, the economic expectations of Republicans and Democrats shifted in opposite directions and by large amounts given that two-thirds of all consumers incorrectly anticipated a Clinton victory. Since a Biden win over Trump (53% vs. 42%) was anticipated in the October survey, it should be no surprise that optimism among Democrats about their future finances rose substantially compared with Republicans. Importantly, for the first time in nearly four years, the financial expectations of Republicans and Democrats were nearly equal (see the chart). Compared with three months ago, the Expectations Index rose by 50% among Democrats but just 7% among Republicans. The outcome of the election can accelerate or narrow these partisan shifts, but unlike the 2016 election, renewed optimism now requires progress against the coronavirus and mitigating its uneven impact on families, firms, and local governments..” said Richard Curtin, chief economist of UM Surveys of Consumers.
Read the University of Michigan Surveys of Consumers release.