Washington
CNN
—
Thanks to slower inflation, Americans are more optimistic about the U.S. economy this month. Voters also see Vice President Kamala Harris as more likely to defeat former President Donald Trump in the upcoming November election.
A preliminary reading from the University of Michigan’s latest consumer survey released Friday showed Americans’ sentiment about the economy improved significantly this month, up 2% from August. It broke a month-long spell in consumer sentiment, barring a small increase last month. Sentiment is now 40% higher than the all-time low in June 2022, when inflation heated up.
“Consumer sentiment rose to its highest reading since May 2024, rising for the second straight month and up about 2% from August,” John Hsu, the university’s director of consumer research, said in a release. “The gain was led by an improvement in durable goods purchasing conditions driven by more favorable prices perceived by consumers.”
The survey also noted that “a growing share of Republicans and Democrats now expect a Harris victory,” just days after Harris and Trump fell to each other during the first presidential debate hosted by ABC on Tuesday.
US consumers felt more upbeat about the future of inflation. Expectations for inflation rates fell to their lowest level since December 2020 in September for the fourth consecutive month, the report said.
The U.S. economy is clearly reeling this election season, from the nation’s housing crisis to inflation — the first topic discussed during this week’s Harris-Trump debate. How the economy shapes up between now and early November will continue to shape voter sentiment as voters head to the polls.
According to the latest consumer price index, inflation has slowed significantly from a 40-year peak in the summer of 2022, and has remained at an annual rate of 2.5% through August, after a modest level earlier this year. The personal consumption expenditures price index, which the Federal Reserve uses for its official 2% inflation target, has similarly eased price pressures over the past two years. The price hike, especially for petrol, has come down significantly compared to the price hikes of two years ago.
“If consumers focus on the overall increase in prices over the past four years, that would favor Trump. But as we see progress toward reducing inflation to 2%, the Fed’s target, that tilts voters’ minds in favor of Harris,” said Ryan, chief U.S. economist at Oxford Economics. Sweet said in an interview with CNN.
Both Trump and Harris have pitched to voters worn out by years of high inflation and high interest rates.
