WASHINGTON: US consumer sentiment increased in early September, with Democrats growing more upbeat about the economy’s outlook ahead of the November 3 presidential election while Republicans’ optimism waned slightly.
The survey from the University of Michigan on Friday, however, showed President Donald Trump, a Republican, and his Democratic Party challenger, former Vice President Joe Biden, in “a virtual tie” when assessing consumers’ responses between July and September on which candidate they thought would win the election, not whom they favoured or how they intended to vote.
“The September gains were primarily in the outlook for the economy, and it was Democrats that posted gains in economic prospects while optimism about the economy weakened among Republicans,” the University of Michigan Surveys of Consumers chief economist Richard Curtin said in a statement.
The University of Michigan’s consumer sentiment index rose to 78.9 in the first half of this month from a final reading of 74.1 in August. The index remains 22.1 points below February’s level. Economists had forecast the index edging up to a reading of 75 in early September.
Consumer sentiment among Democrats increased to 68.4 from a reading of 57.6 in August. It slipped to a reading of 95.7 among Republicans from 98.6. Among independents, consumer sentiment rose to 75.4 from 72.4 last month.
Though consumers believed Trump would be better for the economy, 40 per cent did not expect either candidate would have an impact on their personal finances.
The survey also showed consumers gloomy about their current financial situation and less upbeat about future finances, likely reflecting the expiration of an unemployment benefits subsidy, and suggests consumer spending could slow further.
Nearly 30 million people remain on unemployment benefits six months after the pandemic started in the United States. Retail sales and production at factories slowed in August, indicating that economic recovery from the COVID-19 recession is stalling.
“More respondents reported an income decline rather than gain for the first time since 2014,” said Tim Quinlan, a senior economist at Wells Fargo Securities in Charlotte, North Carolina. “Lower-income households reported a decline more frequently.”
A separate report from the Conference Board on Friday showing its measure of future US economic growth increased 1.2 per cent in August after advancing 2.0 per cent in July. It said last month’s modest rise in the leading economic index “suggests that this summer’s economic rebound may be losing steam heading into the final stretch of 2020.” — Reuters
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