(Bloomberg) -- US near-term inflation expectations fell to the lowest level since early 2021 in September while sentiment eased.
Consumers expect prices will climb at an annual rate of 3.2% over the next year, down from 3.5% in August, according to the final September reading from the University of Michigan. They see costs rising 2.8% over the next five to 10 years, the lowest in a year, data Friday showed.
Even so, the sentiment index fell to 68.1 from 69.5 in August. Respondents were relatively more pessimistic about current conditions compared to the prior month, while their expectations improved somewhat.
While consumer spending has been resilient, it’s starting to subside as the labor market slowly cools. That, combined with lingering inflation, high financing costs and the resumption of student-loan payments is taking a toll on sentiment.
A government report out Friday showed consumer spending barely rose in August while a measure of underlying inflation advanced at the slowest monthly pace since late 2020.
“Consumers are understandably unsure about the trajectory of the economy given multiple sources of uncertainty, for example over the possible shutdown of the federal government and labor disputes in the auto industry,” Joanne Hsu, director of the survey, said in a statement.
Buying conditions for vehicles dropped sharply in the month as consumers said the United Auto Workers strike would make it more expensive or difficult to buy a car, Hsu said. For durable goods more broadly, including homes and appliances, buying conditions fell to a three-month low.
--With assistance from Kristy Scheuble.
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