Consumer sentiment races to 13-year high

Consumer sentiment swelled to a 13-year high in October, surpassing analysts’ expectations following several major hurricanes, according to a University of Michigan survey released Friday. 

The data indicates a strong outlook for consumer spending that would bring the current expansion into at least mid-2018, meaning it would be the second longest economic expansion since the mid-19th century, according to Richard Curtin, the chief economist for the university’s consumer survey.

The increase in sentiment was found among all age groups, income levels and partisan leanings. Nearly 6 in 10 consumers thought the economy had improved in October. 

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The consumer sentiment index rose to 101.1 in October — its highest level since 2004 — after slipping to 95.1 in September amid a series of hurricanes.

While the new survey indicates overall optimism about the economy, it also reflects that consumers’ attitudes about their prospects are about as good as they can be. 

“This ‘as good as it gets’ outlook is supported by a moderation in the expected pace of growth in both personal finances and the overall economy, accompanied by a growing sense that, even with this moderation, it would still mean the continuation of good economic times,” Curtin said.

“Indeed, nothing in the latest survey indicates that consumers anticipate an economic downturn anytime soon — which contrarians may consider a clear warning sign of trouble ahead,” he added.

Overall, Americans expect low unemployment and inflation, small interest rate hikes and modest increases in income, according to the survey. At the same time, Americans have come to accept a more limited pace of improvement in their living standards, Curtin said, due to “lackluster growth rates.”