UMich Inflation Expectations Increase From September, ‘Hope’ Dips

After ECI and Core PCE signaled no end to The Fed’s nemesis, this morning’s UMich survey (final data for October) is the last chance to show that inflation expectations are being managed before next week’s FOMC meeting.

The final print for next 12 months inflation expectations was very marginally lower than the flash print (+5.0% vs +5.1%) but remains higher than the September final print of 4.7%…

Source: Bloomberg

The final October print for the headline UMich sentiment indicator rose modestly to 59.9, driven by an increase in ‘current conditions’ but ‘ future expectations’ dipped. The university’s sentiment index increased this month to 59.9, the highest since April. The current conditions gauge also advanced in October to a six-month high, while a measure of expectations dropped to a three-month low.

Source: Bloomberg

While buying conditions for durable goods, such as cars and appliances, improved based on easing supply-chain constraints and lower prices, consumers were more pessimistic about the business outlook.

“These divergent patterns reflect substantial uncertainty over inflation, policy responses and developments worldwide, and consumer views are consistent with a recession ahead in the economy,” Joanne Hsu, director of the survey, said in a statement.

This pain is expected to continue, given that for the 8th straight month, over 80% of consumers expect interest rates to rise in the year ahead.