U.S. consumer inflation expectations rose sharply in October, the Fed is under pressure | Anue Juheng – US stocks

Preliminary data released by the University of Michigan on Friday (15th) showed that consumer confidence climbed once more to 59.8 in October, which was better than market expectations, but consumers had both long-term and short-term inflation expectations, and short-term inflation expectations were 7. It rose for the first time in a month, a worrying development for the Federal Reserve, which has been stabilizing inflation expectations.

US October Michigan consumer confidence index further rose to 59.8, better than market expectations. (Image: ZeroHedge)

According to data released by the University of Michigan, the initial consumer confidence index in October rose to 59.8 from 58.6 in September, a 6-month high, and the market expected 59.

In terms of inflation expectations, which are closely watched by the market, US consumers’ inflation expectations for the next year have risen sharply, from 4.7% in September to 5.1%, the first increase since March this year. Inflation expectations for the next five years also climbed, rising slightly to 2.9% from 2.7% in September.

The University of Michigan’s October survey showed that long-term and short-term inflation of consumers has risen, putting pressure on the Fed to raise interest rates. (Image: ZeroHedge)

In terms of other sub-indexes, the initial value of the current situation index in October was 65.3, expected to be 59.9, and the previous value of 59.7, a new high in 6 months, while the initial value of the expected index fell from 58 in September to 56.2, lower than the market expected 58.5, It was the first drop since July.

The increase in consumer inflation expectations in the University of Michigan, coupled with the recently released September consumer price index (CPI) report, has brought a lot of pressure to the Fed, which is trying to stabilize inflation expectations.

U.S. consumer sentiment improved and inflation expectations fell in the previous summer due to lower gasoline costs, but now that oil prices have recovered once more, inflation expectations have also grown.

However, consumers’ assessment of purchasing conditions for durable goods such as cars and appliances improved, the most optimistic in more than a year, mainly due to easing supply constraints.

In addition, the University of Michigan’s views on personal finances also vary with income. High-income individuals are more negative, mainly due to financial market volatility, while low-income consumers are the most optimistic in 6 months, mainly due to rising wages. promote.

“Continued uncertainty regarding the future of prices, the economy and global financial markets points to a bumpy road ahead for consumers,” said Joanne Hsu, director of the University of Michigan’s Consumer Confidence Index Survey, in a statement.

Bloomberg economist Anna Wong said long-term inflation expectations will worsen for the foreseeable future as gasoline prices rise, making it difficult for the Fed to slow the pace of rate hikes in December.

Consumer confidence affects economic growth in the next few months. Pessimistic consumer sentiment will dampen spending levels, which will affect the economic recovery. On the contrary, optimistic consumer sentiment will help the future economy.

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