The final University of Michigan Consumer Sentiment Index for October was revised down slightly to 95.5 (previously 96.0) with most of the revision in the six month expectations component at 84.2 (previously 84.8) but also in present conditions at 113.2 (previously 113.4). The final reading is above the 93.2 in September and is in line with solid consumer confidence. As long as the labor market holds up and incomes continue to rise, consumers will be less swayed about other developments in the news cycle.
The 1-year inflation expectations measure was unrevised at 2.5% in October and remained on the low end of the recent range of readings for the past year or so of 2.5%-2.9%. The 5-year inflation expectations measure was revised up a tenth to 2.3%, bringing it off the record low of 2.2% in the preliminary report. The measure is still at the low end of the recent range of about 2.3%-2.6%. However, it should offer a little reassurance to the FOMC that inflation expectations haven’t lost their anchor even as these remain quite subdued in the historical context.
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