The University of Michigan’s latest consumer sentiment index revealed a continued decline for the fourth month, marking the lowest level since May at 60.4. The report, released today, highlights growing concerns among consumers, particularly younger and lower-income individuals, about rising interest rates and ongoing conflict in the Middle East.
Key components of the index showed a significant downturn, with the gauge for current economic conditions falling to 65.7 and expectations for the next six months dropping to 56.9, both reaching their lowest points in half a year. This drop in confidence comes despite the United States experiencing its fastest third-quarter economic growth in over a decade, excluding years affected by the pandemic.
Inflation expectations have also risen to 4.4%, influenced by lingering effects from a gas price increase late in the summer. Although the official inflation rate is currently at 3.7% based on the consumer-price index, experts like Damian McIntyre from Federated Hermes (NYSE:) are pointing out the tough spot consumers find themselves in, caught between inflation pressures and higher borrowing costs.
Despite these concerns reflected in consumer sentiment, stock markets showed resilience today with both the (DJIA) and the seeing gains during trading sessions. Economists are advising caution, however, as they anticipate potential economic slowdowns due to the impact of increasing interest rates on growth momentum.
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