US long-term inflation expectations pick up, sentiment improves

US long-term inflation expectations rose this month, a concern for the Federal Reserve as it tries to balance the price outlook.

The University of Michigan, according to a reading, noted that costs will have a 5% increase over the next year, data showed last week. Consumers expected a price increase at an annual rate of 2.9% during the next few years.

According to the report, expectations took a hit due to gasoline prices this month.

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The college sentiment index rose this month to 59.9, the highest since April. The current conditions gauge also rose to a six-month high in October, while a measure of expectations fell to a three-month low.

Purchases of durable goods, such as cars and appliances, improved by easing supply chain constraints and lower prices, unlike commercial prospects.

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“These divergent patterns reflect substantial uncertainty about inflation, policy responses, and developments around the world, and consumer views are consistent with a looming downturn in the economy,” said Joanne Hsu, director of the survey. , it’s a statement.

The report continued to show a sharp divide along party lines in the last reading before the November 8 midterm elections. While sentiment among Republicans remains much weaker than that among Democrats, it improved to the highest level since April. Independents also posted a six-month high in sentiment. Democrats, meanwhile, were less optimistic in October.

President Joe Biden hopes economic news will improve as high inflation and recession fears put his slim majority in Congress at risk.

That looks increasingly challenging, especially as price pressures still run rampant throughout the economy. Separate data on Friday showed that a critical gauge of inflation watched by the Fed accelerated in September, while consumer spending proved resilient. Meanwhile, a measure of labor costs rose briskly in the third quarter.