US DATA: UMichigan: Consumers Increasingly Concerned About Jobs, Gov't Policy

Among the dozens of indicators underlying the flat sentiment reading in October's preliminary UMIchigan consumer survey (slightly better current conditions/slightly weaker expectations), a few areas of interest that generally show weak conditions in the labor market and purchasing sentiment:

• A 3rd consecutive drop in the net opinion of the government's economic policy, to 52 from 54, marking the lowest since April which had been the lowest since 2011. This came amid the federal government shutdown (though the report notes "interviews reveal little evidence that the ongoing federal government shutdown has moved consumers’ views of the economy thus far") as well as continued concerns over inflation and, increasingly, jobs.
• Perceived probability of job loss in the next 5 years ticked up to 22.9% from 22.7%, for the highest since March, then before that in July 2020 and March 2009.
• A continued deterioration in the index for "good time" to buy large household durables fell to to 74, lowest since November 2022, from 78 prior. Buying conditions for vehicles and homes remained subdued.
• Median expected change in 1-year household income remained in the 0.4-0.5% area for a 5th consecutive month, levels consistent with the bottom of the pandemic in 2020. The implied probability of higher real income over the next year fell to 40.7 from 41.2, actually better than the Q2 lows - presumably as inflation expectations were pared from the highs.
• All that being said, there was a wealth effect offset to weak job and income expectations: the probability of adequate retirement income remained elevated (46%) with 56% expecting stock markets to rise in the next year, and the current value of stock market investments at all time highs. While year-ahead expectations for home values was flat (1.9%), 5Y expectations oddly equaled the series high at 5.3%.
• For all that, there wasn't much difference in sentiment shifts among the three income brackets though the highest-income were the most positive (bottom third 50.5, middle third 53.3, top third 61.9).
• The usual partisan splits prevailed, with consumer sentiment near all-time lows at 36.3 for Democrats and 53.9 for independents, but ticking up to near post-2020 highs for Republicans at 98.2.