Despite signs of cooling inflation, American consumers are feeling less confident about the economy. The University of Michigan’s Index of Consumer Sentiment dipped to 68.9 in October, a 1.2 point decrease from September.
This decline surprises some, given that inflation slowed slightly in September, with the consumer price index rising 2.4% annually compared to 2.5% in August. However, Joanne Hsu, Director of Consumer Surveys, points to persistently high prices as the main culprit for consumer dissatisfaction.
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The upcoming presidential election adds to the uncertainty. Hsu suggests that some consumers may be “holding back” on forming concrete economic opinions until after the November vote.
Mixed Economic Signals:
While inflation is easing and job growth exceeded expectations in September, other factors are weighing on consumer sentiment. Housing costs remain a major concern, and uncertainty among small business owners is at an all-time high.
Political Implications:
With the economy topping the list of voter concerns, these mixed economic signals could have significant implications for the upcoming election. Recent polls show that a majority of voters trust former President Donald Trump over Vice President Kamala Harris to handle economic matters.
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