Americans are still weighed down by high inflation, although sentiment is improving

CNN business

Americans are feeling more positive about the economy and believe inflation will stabilize, but there is still plenty of uncertainty.

The University of Michigan’s consumer sentiment index for September came in at 58.6, down slightly from a preliminary reading of 59.5, according to the school’s Consumer Surveys. That’s the highest reading since April.

Those mixed views were echoed by dozens of CNN Business readers, who said they believed the economy was improving somewhat but were worried it would last. Many also said that the high costs of food, housing and other necessities continue to burden them.

Consumer sentiment has risen sharply since hitting an all-time low in June, as gas prices weighed on Americans’ finances at record highs. Despite the rebound, sentiment levels are still on par with those seen during the Great Recession.

The muted optimism about the economy is felt by consumers across the income spectrum, said Joanne Hsu, director of Surveys of Consumers.

“Consumer sentiment across the income distribution has narrowly narrowed over the past six months, reflecting shared concerns about the impact of inflation, even among high-income consumers who have historically borne the lion’s share of spending,” he said.

Inflation expectations fell in both the short term and five years ahead, survey data showed, with the forecast inflation rate for the next 12 months falling to 4.7%, the lowest reading since September 2021. And long-term inflation expectations fell. 2.7%, the lowest level since July 2021. Lower consumer expectations may prompt consumers to cut spending and demand smaller wage increases — efforts that would align with the Federal Reserve’s mission to reduce demand and lower inflation.

On Friday, the Bureau of Economic Analysis released data showing that high prices are continuing. Price index of personal consumption expenses August showed that its core measure of inflation, which excludes volatile food and energy categories, rose 4.9% from a year earlier in August, up from 4.7% in July. Monthly readings rose 0.6% from July to August. Core PCE is the Fed’s favorite inflation metric.

While consumer sentiment has risen in recent months, many Americans still don’t feel good about the economy.

While gas prices are now far from their record average of $5.02 a gallon since mid-June, most people they are still spending more on food, housing, energy and other essentials.

Marcus Satterfield, 34, is happy to be back paying about $60 to fill his tank, down from nearly $100 this summer. But those savings don’t offset the increases he’s seeing at supermarkets and other retailers near his Virginia Beach, Va., home.

A restaurant manager at a local hotel, Satterfield said she now pays between $400 and $450 a month on groceries for herself and her 4-year-old daughter Marley, up from $300 in February. He said the family chicken package costs about $20, up from $13, and beef $1.50 more. She is paying extra for the yogurt and snacks Marley brings to preschool.

Meanwhile, her rent went up to $1,580, up from $1,300, in the past two years, and she just received notice from her electric company that her monthly charge will increase by more than $15.

To try to save money, Satterfield now buys more store-brand produce and less seafood, even though her doctor advised her to eat more fish to improve her health.

“I make a decent amount of money, but when prices keep going up, I feel like the money I’m making doesn’t matter,” said Satterfield, who believes he’s taken a 40 percent pay cut due to inflation.

Other people are more hopeful that the economy will turn a corner and improve.

Anthony Zuccarini, 45, said he gets a “pleasant surprise” every time he pulls into a gas station now. He paid $3.10 a gallon the last time he filled his tank, down from $4.50 a gallon in the summer.

While the cost of cereal, milk and coffee in Kansas City, Missouri spiked earlier this year, prices have since stabilized. Another positive: Zuccarini’s 18-year-old son, Aden, recently landed a job at Dick’s Sporting Goods — two days after applying.

Anthony Zuccarini, far right, canceled his family vacation this summer because of high prices.  But the family hopes to get one in the spring.

Zuccarini, who works in marketing, and his wife, Aileen, an occupational therapist, put off vacationing this summer because hotels and gas were too expensive. A couple with three children at home is trying to save more money in case one of them loses his job.

But now they’re planning a family trip in early spring, hoping they’ll feel better about spending money on vacations by then.

“Overall, I think the economy is improving, albeit slowly,” Zuccarini said. “But at least it’s obvious.”

Alexis Reyes of Wendell, North Carolina describes the economy as a plane that went down earlier this year. Since then it has started to go back, “but it is very slow and hard”.

Reyes, who works in talent acquisition for a supply chain company, still fears the nation’s financial health could take a turn for the worse. And since her husband retired from his retail management job, she feels the added pressure of being the sole breadwinner providing for the family’s health benefits.

Although Alexis Reyes thinks she has a good job, she is concerned about the health of the economy.

So the couple, who have a teenage son and two grown daughters at home, are being very cautious and trying to save as much as they can. They no longer use credit cards and now shop more at Dollar General and Walmart than Publix. They order meat online to get a better rate and avoid unnecessary car trips.

“It’s hard to be optimistic,” said Reyes, 50, pointing to Federal Reserve rate hikes, the recent threat of a freight rail strike and the possibility of another surge of Covid-19 this winter. “I want to be. I absolutely do. But it’s very hard to be optimistic when every couple of months you’re faced with something else.”