September’s Preliminary Consumer Sentiment Shows Gain
September’s preliminary consumer sentiment release showed a rise to 70.2, compared to the Bloomberg consensus forecast of 67.5 and a previous reading of 65.7. The less bad is good philosophy seemed to help this month’s preliminary sentiment index, as consumer’s hope declining job losses, what appears to a bottom in the housing market, and improvements in US equity markets continue to prop up the economy. Supporting this is the fact that the consumer expectations index jumped to 69.2 in September from 65.0 in August.
According to the survey by Reuters/UMich, “Confidence rebounded in early September as consumers increasingly expected the economy to improve despite their reluctant conclusion that their own financial situation would remain quite problematic for some time.” This puzzling rationale likely implies that despite some improved confidence, actual consumer spending should remain mute.
In other economic news this morning, US wholesale inventories fell -1.4% in July compared to a negatively revised decline of -2.1% in June. The fall was worse than street estimates of -1.0%. This is the lowest level since September 2006. There is may be some good news in this reading, going forward businesses will eventually be forced to re-stock depleted inventories, which should provide a bump for the manufacturing sector. However, if demand for these goods does not return the effects may only be temporaneous.
