US Consumer: Sentiment rise more modestly than confidence - Wells Fargo

Analysts from Wells Fargo, point out that the rise in Consumer Confidence in September came from gains the expectations component that offset a decline in the assessment of the current situation. 

Key Quotes: 

“The University of Michigan’s Consumer Sentiment index edged higher in September, rising 1.4 points to 91.2. The bulk of the improvement came in the expectations series, largely among higher income households.”

“While both current conditions and expectations rose from their mid-month levels, all of September’s overall gain came from the 4-point rise in the expectations component. By contrast, consumers’ assessment of current economic conditions fell 2.8 points in September to 104.2.”

“The University of Michigan consumer sentiment survey does not show anywhere near the oomph that the Conference Board’s Consumer Confidence survey has shown recently. Consumer confidence has come in above expectations for the past two months and is at its highest levels since the recession, while consumer sentiment remains mired in the same range that it has been for much of this year. One possible explanation for this apparent split is that the Conference Board survey focuses much more on the availability of jobs, while the University of Michigan survey asks many more questions about income, the stock market, interest rates and inflation.”

“After falling to a low 52 percent in August, consumer expectations for higher interest rates over the next 12 months rose 9 points to 61 percent in September. The rise was one of the larger moves in the consumer sentiment survey and coincides with the more hawkish rhetoric from many Federal Reserve Board Governors. Expectations of higher interest rates do not appear to be spurring more borrowing ahead of potential rate hikes.”