USA: consumer confidence improves in October, but remains very low

The index stood at 59.9 points, according to the final estimate from the University of Michigan. The preliminary estimate had established this index at 59.8 points.

Consumer confidence in the United States improved in October compared to September, a little more than initially indicated, but it remains very weak, with American households still facing high inflation and higher cost credit.

The index stood at 59.9 points, according to the final estimate from the University of Michigan released on Friday. The preliminary estimate had established this index at 59.8 points.

This represents an increase of 2.2% compared to September, but the index “is only 10 points above the all-time low reached in June”, said the director of the survey Joanne Hsu, quoted in a press release.

Consumers are seeing, on the one hand, an improvement in purchasing conditions, while supply problems are easing and prices are rising more slowly. But the outlook for the coming year is deteriorating.

These divergences “reflect substantial uncertainty about inflation, policy responses and developments around the world, and consumer views are consistent with a coming recession in the economy,” said Joanne Hsu.

Inflation remained in September close to its highest level in 40 years, at 8.2% over one year in the United States, according to the CPI index, which refers.

It is the financially wealthiest consumers, with stock market investments and real estate assets, who are the most worried about the future. Those with lower incomes, on the other hand, were more optimistic than before.

Thus, “given continued consumer unease with the economy, especially this month among high-income consumers, any continued weakening in income or wealth could lead to further spending cuts that would bolster other risks of recession”, warns the director of the investigation.

It also indicates that “uncertainty surrounding inflation expectations remains high, indicating that inflation expectations are likely to remain unstable in the coming months”.

In the third quarter, GDP in the United States grew by 2.6% at an annualized rate, returning to growth after having contracted in the previous two quarters. But the arrival of a recession seemed inevitable.

Inflation reduces household purchasing power, and to slow it down, economic activity must be slowed down by raising interest rates. Credit is therefore more expensive.

The US central bank (Fed), maneuvering, should decide on an additional increase Tuesday and Wednesday, at its next monetary policy meeting.

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