The University of Michigan and Thomson Reuters said that consumer sentiment rose from 78.3 in September to 83.1 in October, its highest level since late 2007. This was the third consecutive monthly increase, haven risen from 72.3 in July. The measure had been expected to decline somewhat, so this result reflects increased optimism among the pubic. Given the many headwinds facing the economy right now, and with a possible fiscal cliff looming, this might be surprising.
Yet, this report is consistent with a similar one from the Conference Board a couple weeks ago, which reported Americans more cautiously upbeat about the future. Indeed, while component assessing the current economic environment also improved, the primary driver of this month’s gain was the improved expected perceptions of the coming months.
Again, this might seem counterintuitive, especially for those of us who are more concerned about the consequences of the fiscal cliff or the slowing of the global economy. But, these types of indicators often are a snapshot of feelings right now, and it might also be the case that the public does not feel that the threats from the “cliff” are as real as they are political. That disconnect is one that will be discussed more and more as we approach the end of the year, with policymakers attempting to avert the crisis.
Chad Moutray is chief economist, National Association of Manufacturers.