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MORGAN STANLEY FINDS INFLATION CONCERN EASING BUT POSSIBLY TOO SOON

In its latest survey of U.S. consumers, Morgan Stanley found inflation concerns easing to their lowest level in three years, but while confidence in the economy and household finances are improving, both remain below highs seen in January.

The findings, unveiled in a report lead by equity strategist Michael Weaver, were from the MS U.S. Consumer Pulse Survey of 2,000 people in the U.S. from Sept 25th-Sept 29.

Weaver wrote that inflation is the top concern for the next 12 months but that the proportion of consumers citing it as their primary concern fell to the lowest level since 2022.

56% of consumers reported inflation as their top concern, down from 60% the month before and 63% in the survey last year, as per MS.

But, Weaver says the decline "may be premature as tariff price pass through is likely not yet complete." He cites MS economists' suggesting that more than two thirds of firms affected by tariffs have not raised prices yet or expect further increases. And citing their examination of transcripts they note that "companies are increasingly discussing flexing pricing power to mitigate the impact of tariffs."

Behind inflation, the U.S. political environment was the second most commonly listed concern cited by 42% of respondents, up from 40% the month before, according to MS.

Meanwhile, confidence in the U.S. economy and household finances improved from the prior month with 36% of consumers expecting the economy to improve in the next six months versus 33% last month and 44% in January. On the flip side, 46% of consumers see the economy getting worse in the next 6 months. This compared with a more bearish 49% last month and a more optimistic 36% in January.

Still the survey found short term spending holding up with 32% of consumers expecting to spend more next month while just 15% said they expected to spend less.

In response to questions about inheritances, 17% reported receiving one, while 14% have expectations to receive an inheritance in the future with the incidence and amount correlating with income. While 59% said they used or would put their inheritance towards savings, retirement or investments, about a third mentioned using inheritance for housing and or debt payments.

(Sinéad Carew)

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