Consumer Sentiment Sharply Higher

Consumer sentiment ends September at a very healthy 100.1, down slightly from 100.8 at mid-month and sharply higher from August's 96.2. Lower income households lead September's gain to offset downward pull from higher income households in a result which suggests, according to the report, that the expansion has now benefited nearly all population groups.

Income optimism across all groups is the strongest since 2004 and is getting a lift from declining inflation expectations and, with this, the prospect of rising spending power. And despite concerns over tariffs, which were cited by nearly 1/3 of the sample, consumers see economic growth continuing and unemployment falling. Note that among those who cite tariffs as a concern, confidence is generally lower.

Though low inflation expectations may be a positive for income prospects, they nevertheless could be a concern for the Federal Reserve if expectations begin to substantially erode. Year-ahead inflation expectations are down 1 tenth this month at 2.7 percent with 5-year expectations up 1 tenth at 2.5 percent.

Other readings in today's report include a 115.2 level for current conditions, vs 110.3 in August and 116.1 at mid-month September, and 90.5 for expectations vs August's 87.1 and 91.1 at mid-month.