Consumer Sentiment Continues Recovery-Best Performance

Consumer sentiment extended its recovery-best performance in October, coming in at a final 86.9 vs 86.4 at mid-month and September's final reading of 84.6. The index is at its highest level since July 2007.

A big gain in expectations leads the October report, at a final 79.6 vs September's 75.4. Gains in this component point to rising confidence in the jobs outlook.

The current conditions component remains especially strong and is holding near its recovery best levels where it has been for the last year. But the reading compared to September is fractionally lower, at 98.3 vs 98.9. This points to strength in consumer activity in October but not acceleration.

Inflation readings are very quiet, held down by low gasoline prices. The 1-year outlook slipped 1 tenth from September to 2.9 percent with the 5-year outlook unchanged at 2.8 percent.

Income growth is no better than moderate right now, evidenced by this morning's personal income and outlays report. But the job market is improving and there's bubbling going on in consumer confidence reports.

Recent History Of This Indicator:
The Reuter's/University of Michigan's consumer sentiment index rose 1.8 points to 86.4 for the mid-month October reading which is the new recovery high going back to July 2007. The gain was centered in the expectations component, up 3.0 points to 78.4 which is the best reading since October 2012. Gains in this component reflected optimism on job and income prospects. Lagging but still respectable was the current conditions component which was unchanged at a near recovery high of 98.9. The effect of low gas prices was seen in 1-year inflation expectations which were down 2 tenths to plus 2.8 percent which is very low for this reading. The 5-year inflation outlook was unchanged and also at plus 2.8 percent.