Consumer Sentiment Jumped In First September Reading

We guess you could call it irrational exuberance. The Thomson Reuters/University of Michigan Consumer Sentiment Index took an unexpected jump in the preliminary September reading, released Sept. 14. The index rose nearly five points from the late August number, reaching 79.2, the highest level since May. The preliminary Expectations Index also surged to 73.4 from 65.1 in the final August reading. Consumers’ view of their long-term economic prospects reached the highest level in five years. Some of the good feeling can be seen in the retail sales numbers for August: Auto sales reached their highest level in five years, too.

But don’t get too excited. Richard Curtain, chief economist of UM’s Surveys of Consumers, attributed the gains to a temporary bump from the political conventions. “The sooner (the confidence) is tempered, the less economic damage will be incurred due to failed expectations,” he said. Ouch!