Consumer Sentiment Shows Solid Improvement From September

Consumer sentiment fell back in the latter half of October compared to the first half but still showed solid improvement from September. The index ended October at 95.5 versus 96.0 at mid-month and against 93.2 in September.

Current conditions are the big plus for October, rising nearly 5 points to 113.2 and offering a positive indication for consumer spending this month. Expectations also improved, up nearly 1 point to 84.2. The report notes that the negative impact of tariffs is the greatest concern for consumers though less so now than last month, with the GM strike a distant second and the Trump impeachment a more distant third.

A clear negative in the report, at least for Federal Reserve policy makers who are trying to give a lift to inflation, is weakness in inflation expectations, falling 3 tenths in the month to 2.5 percent for the year-ahead outlook and 1 tenth to 2.3 percent for the 5-year outlook. Both of these readings are testing the bottom end of their long-term range.