Consumers Shrug Off Inflation, Get Marginally Happier

Maybe the US consumer isn’t feeling so terrible after all.

Despite an underwhelming preliminary read on the University of Michigan’s sentiment gauge for October, a separate report suggested the consumer mood is improving.

After three consecutive monthly declines coinciding with the proliferation of the Delta variant and escalating inflation concerns, the Conference Board’s gauge rose in October. At 113.8, the headline print exceeded all estimates (figure below).

The forecast range, from 59 economists who ventured a guess, was 101.0 to 112.0.

In stark contrast (superficially, anyway) to dour readings on buying conditions in the Michigan survey, Lynn Franco, Senior Director of Economic Indicators at The Conference Board, said that despite the highest near-term inflation concerns in more than a dozen years, more consumers said they planned to buy houses, cars and major appliances in October.

That’s “a sign that consumer spending will continue to support economic growth through the final months of 2021,” Franco remarked.

Government data out Tuesday showed median new home prices rose to nearly $409,000 in September.

Almost half of participants indicated they’ll take a vacation between now and March. That was the most since the onset of the pandemic, when vacationing became dangerous and, for a time, effectively illegal.

It’s likely the decline in COVID cases (figure below) is helping to allay concerns at the margins.

Assessments of the labor market improved, and both the present situations index and the expectations gauge ticked higher.

It’s probably not worth torturing the data or otherwise extrapolating. “The underlying message here is that confidence remains below its pre- and post-pandemic peaks, but at least isn’t deteriorating any further,” Bloomberg’s Cameron Crise remarked. “That should be good enough for a stock market enjoying another earnings party.”



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3 thoughts on “Consumers Shrug Off Inflation, Get Marginally Happier

  1. Ray Dalio says he would support a billionaire tax — just not this one

    Wall Street owns this country and the Wall Street billionaires run it.

    Speaking from a purely political perspective: it would behoove Democrat politicians to realize should they increase taxes on these people, they’ll jerk their money from the markets, resulting in a crash and leaving those with retirement plans standing around with their pants down around their ankles wearing only beer barrels held up with used suspenders.

    Not exactly the way for a politician to get re-elected.

    1. Why wouldn’t they just borrow against their portfolio to pay the tax. They would not want to “crash” the value of the remaining 75% of their wealth.

  2. Mr H, any way to fact check this? Do 700 billionaires really control the ability/assets to crash our entire markets? Seems a bit of a stretch to me.

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