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US consumer confidence rebounds amid expectations for Fed rate cut

Consumer confidence in the U.S. rebounded more than expected in September after registering the largest monthly fall since December 2012 in the prior month, preliminary results from a survey conducted by the University of Michigan showed.

The index of consumer sentiment rebounded to a reading of 92.0 in September, surpassing the Econoday consensus estimate of 91.0 and August's final reading of 89.8.

The data indicates that consumers expect the Federal Reserve to cut interest rates in the week of Sept. 16, with net decreases in rates more frequently anticipated now compared with any time since the Great Recession in February 2009, according to Surveys of Consumers Chief Economist Richard Curtin.

"These expectations are likely to diminish the impact on spending from a quarter-point rate cut," Curtin said, noting that negative reactions from consumers may increase if rates remain unchanged.

The survey noted increased concerns surrounding the effect of tariffs on the domestic economy in early September, with 38% of all consumers spontaneously citing the negative impact of tariffs. This marks the highest percentage since March 2018.

In addition, these consumers expressed more negative views on the overall economic outlook and said they expect increased inflation and unemployment in the year ahead.

Neither a recession nor a big bounce in personal consumption is expected in the year ahead, the survey noted.

"The outlook for consumption is for a slower but positive growth, keeping the expansion going for another year," Curtin said.

The index of consumer expectations rose to 82.4 from 79.9 in August, while the current economic conditions index advanced to 106.9 from 105.3.

The next release, containing final data for September, is due to be published Sept. 27.