Consumer Sentiment Index Up Nearly 5 Points

The weekly consumer comfort index, which is on its best run in six years, correctly signaled what is a big uptick for the twice monthly consumer sentiment index, which is up nearly 5 points to 92.1 for the best reading since mid-August when troubles in China first upset the financial markets. The current conditions component, which turns on ongoing changes in the labor market, is up very solidly, more than 5-1/2 points higher to 106.7. This hints at strength for October jobs and consumer spending. The expectations component, which turns on changes in the outlook for the labor market, is up 4-1/2 points to 82.7.

There's been plenty of indications that prices are soft including inflation expectations in this report which are down 1 tenth for both the 1-year and 5-year outlooks, to 2.7 and 2.6 percent respectively. These readings, pulled lower by falling prices at the gas pump, will not be encouraging to Federal Reserve policy makers who are working to raise inflation expectations.

Inflation aside, this report is very good news, pointing to rising consumer spirits going into the all important holiday shopping season.

Recent History Of This Indicator:
Consumer sentiment showed the most reaction to market and global troubles in August and September, sinking noticeable from the low 90s to the mid-80s before bouncing back at the end of September to 87.2. A further 2-point bounce is expected for the October flash, to 89.5.