Americans are feeling better about the economy, but inflation worries still loom

Americans continue to feel slightly better about the economy as gas prices retreat from their early summer highs.

Consumer sentiment in September notched up to its highest level since April, according to the latest survey from the University of Michigan. Preliminary data released Friday showed an increase in the consumer sentiment index to 59.5 in September from 58.2 in August.

Consumer sentiment had fallen to a record low of 50 in June when gas prices hit historic highs across the country, but the continued decline in fuel costs since then has allowed consumers to feel a little more optimistic.

Despite the gains, sentiment remains historically low and comparable to levels the University of Michigan’s survey found during the depths of the Great Recession.

While the September survey showed that respondents don’t expect high prices to go away any time soon, consumers said they’re expecting inflation to hit 4.6% over the next 12 months and 2.8% within the next five years — the lowest levels recorded so far this year.

“It is unclear if these improvements will persist, as consumers continued to exhibit substantial uncertainty over the future trajectory of price,” Joanne Hsu, Surveys of Consumers director, said in the report. “Uncertainty over short-run inflation reached levels last seen in 1982, and uncertainty over long-run inflation rose from 3.9 to 4.5 this month, well above the 3.4 level seen last September.”

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