Last Update: 31-Oct-14 10:06 ET
- The University of Michigan Consumer Sentiment Index was revised up to 86.9 for the final October reading from 86.4 in the preliminary reading. The index is up from 84.6 in September. The Briefing.com consensus expected the index to remain at 86.4.
- The final October reading was the strongest for consumer sentiment since July 2007.
- Since the preliminary reading was released, the equity markets have surged while gasoline prices continued to trend lower and employment conditions continued to improve. All three factors played a strong role in boosting sentiment.
- The gains in sentiment, however, are not likely to drive consumption growth. Spending relies on income growth. Until income growth accelerates from its current lackluster path, consumption gains will be limited.
- Consumer sentiment has little influence on consumption. As long as payroll levels continue to expand, the resulting income growth should keep consumption gains steady regardless of the monthly ebbs and flows in sentiment.