The Reuters/University of Michigan consumer confidence survey rose far more than expected to a reading of 73.1 in September from 63.0, marking the third consecutive month of improvement. Looking at a breakdown of the report, sentiment on both current economic conditions and the outlook improved quite a bit despite the jump in the unemployment rate to a 5-year high. Indeed, the drop in gasoline prices has had a greater impact, and looking back over the past 18 months, there appears to be an inverse correlation between this index and average gasoline prices. Nevertheless, given the drop in US Advance Retail Sales for the month of August, it is clear that more optimistic sentiment does not necessarily translate into more consumer spending.
Reuters/University of Michigan Consumer Confidence (Monthly)Source: Bloomberg