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Sentiment Data Suggest US Consumers More Confident as Election Looms

Jay Brahach October 16, 2020

The University of Michigan’s preliminary Consumer Sentiment Index (CSI) beat expectations this morning, measuring in at 81.2 for October against a predicted 80.2. Despite the 0.8-point gain over September’s final CSI figure, the October reading is almost 20% lower than pre-pandemic levels.

The trade weight US dollar index (DXY) remained essentially unchanged on the back of this release.

The figures reported today make for an interesting read, as the UoM attempts to shed light on the impact presidential electioneering has had on the consumer psyche. The survey asked consumers who they expected to win the election, as opposed to voting preference, with the goal of determining political influence on economic expectations.

When looking at all consumers, former vice president Joe Biden’s lead increased to 7 percentage points, up from 1 percent last month. However, given the nature of US elections, undecided voters can carry greater weight in determining election outcomes. This voting segment gives President Donald Trump a slight 2-3% lead over Biden.

How the final UoM figures change at the end of the month, just before the November 3 election, will be revealing. After the dueling “Town Halls” with Biden and Trump Thursday evening, overall opinion polls this morning still give Biden a solid lead over Trump.

The Expectations Index increased from 75.6 in September, to 78.8 this month. This is still 14.4% lower than the peak in February, and it seems like the uptick is being spurred by election hype.

In contrast, the Current Economic Index saw a 2.9-point drop from September. A recent increase in COVID-19 Infections across the US has apparently created much concern amid wobbly employment growth and a lack of federal relief payments.

As the election draws ever closer, and with millions of postal votes already cast, consumers are holding their breath. The availability of federal relief funding will likely have a large impact on consumer sentiment next month and could be an important determinant of the outcome of the UofM sentiment survey in November.

Jay Brahach
Account Executive and Currency Analyst