Slower inflation is boosting Americans’ attitudes toward the economy

Americans are feeling a greater sense of optimism about the US economy this month, thanks to slower inflation. Voters also see a greater likelihood that Vice President Kamala Harris will defeat former President Donald Trump in the upcoming November election.

The University of Michigan’s latest consumer survey, released Friday, showed that Americans’ attitudes toward the economy improved notably this month, rising 2% from August, according to a preliminary reading. That broke a monthslong spell of consumer sentiment mostly holding steady, aside from a modest increase last month. Sentiment is now 40% higher than the record low reached in June 2022, when inflation was running red hot, but it still remains below pre-pandemic levels.

“Consumer sentiment rose to its highest reading since May 2024, increasing for the second consecutive month and lifting about 2% above August,” Joanne Hsu, director of the university’s Surveys of Consumers, said in a release. “The gain was led by an improvement in buying conditions for durables, driven by more favorable prices as perceived by consumers.”

The survey also noted that “a growing share of both Republicans and Democrats now anticipate a Harris win,” a few days after Harris and Trump went toe-to-toe during their first presidential debate, hosted on Tuesday by ABC.

US consumers also felt more upbeat about inflation’s future. Expectations for inflation rates in the year head declined for the fourth-straight month in September, according to the report, reaching its lowest reading since December 2020.

The US economy clearly looms large this election season, from the country’s housing affordability crisis to the state of inflation — and it was the first topic discussed during this week’s Harris-Trump debate. How the economy evolves between now and early November, when voters head to polls, could continue to shape voters’ perceptions.

Inflation is down substantially from the 40-year highs of summer 2022, and after a rough patch earlier this year, it’s perched at an annual rate of 2.5% as of August, according to the latest Consumer Price Index. The Personal Consumption Expenditures price index, which the Federal Reserve uses for its official 2% inflation target, has similarly shown easing price pressure over the past two years. Price increases across the board have come down markedly compared to two years ago, especially for gasoline — which plays a prominent role in influencing consumers’ perception of prices.

“If consumers are focused on the cumulative increase of prices over the last four years, that favors Trump. But as we’re looking at the progress toward getting inflation back down to 2%, the Fed’s target, that’s tilting voters’ perceptions in favor of Harris,” Ryan Sweet, chief US economist at Oxford Economics, told CNN in an interview.

Trump and Harris have both laid out proposals for an electorate worn out by years of high inflation and elevated interest rates.