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Consumer Attitude Towards the Economy at Three-month High as of August

Consumer Attitude Towards the Economy at Three-month High as of August

According to recent surveys, the consumer attitude towards the country’s economy  improved somewhat as of August, thus reaching its highest in the present quarter. This rise in the general population sentiment is mostly the result of sales at retailers increasing and mortgage rates going down, both of which have boosted Americans’ buying plans.

This renewed sentiment in the population is definitely encouraging, and it might lead to people increasing their financial obligations applying for more personal loans or mortgages. However, this new attitude towards is definitely fragile, and any concerns about price increase or uncertainty due to the coming elections might cause an increase in both short and long term inflation expectations.

Many financial entities expected some kind of growth during the second half of this year, which would imply also an increase of student and personal loans. However, the growth, while existent, has been somewhat disappointing, and even this renewed sentiment towards the country’s economy can’t hide the concern that most citizens feel about the economic outlook of the U.S. for the coming months.

Purchasing plans of the population were reinforced by a slight decrease in prices, although inflation fears abound among U.S. people, most of whom still suffer the devastating effects of the financial crisis that hit the country a few years ago. It is precisely this lingering fear and the uncertainty of the coming change of administration what is keeping this new positive sentiment towards the economy from growing steadily.

Making matters even worse, the one-year inflation expectation rose slightly to 3.6 percent, a 0.6 percent increase from last quarter. This increase goes hand in hand with the year-by-year inflation outlook, which also gained 0.3 percent compared to last year.

All this uncertainty and ups and downs experienced by the public expectations concerning the future of the country in general and of the economy in particular have risen the odds that the Fed will launch yet a third round of bond buying according to a Reuters poll released last week.

As weeks pass and election time draws near, people’s expectations grow more unstable, which might cause a decrease in personal loans, mortgages and even student loans. Hopefully, when a new administration takes office in a few more weeks, the situation would have reversed and things will be on track to improve.