UMich Sentiment Improves In August (But Not For The Rich)

After preliminary UMich data for August showed a disappointing drop in sentiment, ‘hopes’ remained among analysts that the late-end of the month (and the ever rising stock market) might have improved things to further improvement, and it did.

• The headline sentiment’s 72.8 flash print was replaced with a 74.1 – a modest rise MoM

• Current Conditions rose from the 82.4 flash to 82.9 final – flat MoM

• But ‘hope’ – Expectations – rose from 66.0 flash to 68.5 final – a decent jump MoM

Source: Bloomberg

Sentiment for the wealthiest fell…

Source: Bloomberg

Buying Conditions barely budged…

Source: Bloomberg

Even Democrats saw sentiment improve modestly…

Source: Bloomberg

As UMich explains, the pandemic has created distinctive consumer reactions to the economy:

Since the shutdown of the economy was due to health not economic reasons, a sizable number of consumers thought conditions could hardly get any worse. The natural response was that economic conditions would improve given the absence of any negative economic causes. For example, while nine-in-ten consumers viewed the current state of the economy negatively in August, half of all consumers anticipated the economy would improve in the year ahead. However, although an improved economy was anticipated, when asked to judge the state of the overall economy, 62% still thought that conditions in the economy would remain unfavorable.

On the inflation front, both measures increased:

• Expected change in median prices during the next year rose to 3.1% vs. 3.0% last month.

• Expected change in median prices during the next 5-10 years rose to 2.7% vs. 2.6% last month.

Still, not exactly a “V-Shaped” recovery in sentiment (and remember the Conference Board sentiment crashed).