2023-08-11 17:35:00
U.S. consumer inflation expectations fall unexpectedly, short-term gauge returns to near 16-month low
News from the Associated Press on August 12 (Editor Zhao Hao)Local time on Friday (August 11), the latest data released by the University of Michigan showed that American consumers’ long-term and short-term inflation expectations unexpectedly fell, which temporarily boosted the stock market while suppressing the dollar.
Specific data show that the U.S. consumer’s one-year inflation rate is expected to return to 3.3% in August, down 0.1 percentage points from 3.4% in July, the lowest reading since April 2021, and the market had expected a rebound to 3.5% , but still higher than the range of 2.3-3.0% in the two years before the new crown pandemic.
Longer-term inflation expectations for consumers over a 5- to 10-year period came in at 2.9%, also down 0.1 percentage point from the previous month. The market had expected it to remain at 3%, compared to 2.2-2.6 in the two years before the pandemic % range, long-term inflation expectations are still high.
As the index of inflation expectations fell, it suppressed the Fed’s expectations of “further rate hikes” and “keeping interest rates at high levels for a longer time”. After the report was released, the US dollar fell significantly, and the three major US stock indexes rebounded, among which the Dow, which is more sensitive to the economy, turned up.
The data also showed that although real prices for gasoline and food rose, the initial consumer confidence index fell slightly to 71.2 in August, higher than market expectations of 71 and around the highest level since November 2021. In addition, the initial value of the current conditions index rose more than expected to 77.4, and the initial value of the expectations index recorded 67.3.
Short-term inflation has shown “remarkable stability” for three straight months, survey director Joanne Hsu wrote in the report. He added, “Consumers have shown greater confidence, and these trends suggest that they believe inflation has turned a corner.”
The report also showed that buying enthusiasm for durable goods reached its best level since June 2021. Still, more than a third of consumers said high prices were eroding their living standards and they were still being hurt financially, Hsu said.
Hsu pointed out that the development of the labor market will determine the direction of consumer confidence in the future. If the labor market continues to develop well, it will be good news for consumers. While consumer confidence has recovered to some extent, they are still wary of changes in labor market conditions that will affect their spending behaviour.
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