The jobless recovery and the perception that employment growth will continue to lag has taken a toll on confidence since the summer began, according to the final survey released.
The Thomson Reuters/University of Michigan Consumer Sentiment Index fell from 68.9 in August to 68.2 in September, though the final reading did rise from the mid-month reading of 66.6.
Nonetheless, anxieties remain amid a sluggish recovery that hit a soft patch over the summer, as lackluster job growth is limiting gains in income and spending.
Interestingly, one-year inflation expectations fell from 2.7% to 2.2%, which, along with other measures of inflation expectations, have set off alarm bells at the Fed (see Fed sees deflation as public enemy number one).
However, looking out five years, the inflation outlook receded by just 0.1% to 2.7% and remains well-anchored.
Concerns that prices might actually decline have shown up in the Fed’s latest statement, but prices seem to be stabilizing at a low level. And recent increases in commodity prices and the falling dollar argue against further declines in the rate of inflation.
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