U.S. consumer sentiment improved more than expected in September, but was still stuck at its weakest level in more than a year due to economic worries among upper-income families, a survey released on Friday showed.
The Thomson Reuters/University of Michigan's final September reading on the overall index on consumer sentiment stood at 68.2, up from a preliminary figure of 66.6 but down from 68.9 in August.
Analysts had predicted a month-end figure of 67.0.
U.S. stocks gained following the report.
"The entire late September gain, however, was among households with incomes under $75,000 while upper income households reported much less favorable economic prospects," the survey's director Richard Curtin said in a statement.
Curtin said the divergence between the two income groups was partly caused by worries over a protracted delay to an extension of federal tax cuts to families with incomes above $250,000.
"It is hardly a surprise that potential reductions in after-tax incomes a few months from now will influence people's current spending decisions," he said.
This outlook of lower incomes reduced consumer one-year inflation expectations to their lowest in a year. This could be worrisome for the Federal Reserve that is attempting to combat disinflationary pressure and to avert deflation.
The survey's one-year inflation gauge fell to 2.2 percent in September from 2.7 percent in August, while its five-to-10-year inflation barometer ended at 2.7 percent versus 2.8 percent in August.
The survey's barometer of current economic conditions was 79.6 in September, up from 78.4 in in the preliminary September report and 78.3 in August. It came in above a forecast of 78.9.
The survey's gauge of consumer expectations rose to 60.9 from 59.1 in the preliminary September data and above a forecast of 60.0. Despite the bounce, it was below August's 62.9 and was still the lowest reading since March 2009.
The measure on consumers' 12-month economic outlook improved to 61 from to 59 in the preliminary September data. It was at the lowest since April 2009 and was down 8 points from August.
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