Consumer Sentiment Improves in August

The University of Michigan’s Index of Consumer Sentiment improved in August to a reading of 74.1, up from 72.5 in July.

The 2.2% monthly increase is accompanied by a 17.5% yearly decline, as the index remains way below its level in August 2019 at 89.8.

The Current Economic Conditions index recorded levelled up by 0.1% to 82.9, from 82.8 last month, while the Index of Consumer Expectations rose by 3.9% to 68.5, from 65.9 in July 2020.

“Consumer sentiment has remained trendless in the same depressed range it has traveled during the past five months,” sais the Surveys of Consumers chief economist, Richard Curtin.

“The August figure posted an insignificant gain of just +0.4 Index points above the April to July average. The small August gain reflected fewer concerns about the year-ahead outlook for the economy, although those prospects still remained half as favorable as six months ago. The pandemic has created distinctive consumer reactions to the economy

“Since the April shutdown of the economy, a sizable number of consumers thought conditions could hardly get any worse. The natural response was that economic conditions would improve given the absence of any negative economic causes for the recession. For example, while nine-in-ten consumers viewed the current state of the economy negatively in August, half of all consumers anticipated the economy would improve in the year ahead.”