Consumer sentiment has held the steady the past two weeks, indicated by little change in the final August index at 67.9 versus the mid-month flash to 67.8. The index posted a gain from July's 66.4 but is down from 69.4 a year ago and remains historically depressed.

Very favorable readings specifically for the Federal Reserve are inflation expectations which edged down a tenth for the year-ahead outlook to 2.8 percent and remained steady for a fifth straight month for the 5-year outlook at 3.0 percent. Steady and well anchored medium-term inflation expectations are what the Fed wants most and the latter reading offers strong assurances that rate cuts can begin.

On sentiment and the ongoing election, the report notes that Democrats in its sample posted a 10 percent gain in the month while Republicans posted a 10 percent decline. The report further notes that this pattern, which includes a slight rise for Independents, reflects"a sea change in election expectations" with Harris emerging as the Democratic candidate.

Consumer sentiment is expected to edge up marginally to 67.9 for final August from 67.8 in the preliminary August report which was up 1.4 points from July. Year-ahead inflation expectations for final August are expected at 2.9 percent, which would also be unchanged from the preliminary report.

The University of Michigan's Consumer Survey Center questions households each month on their assessment of current conditions and expectations of future conditions. Preliminary estimates for a month are released at mid-month and are based on about 420 respondents. Final estimates are released near the end of the month and are based on about 600 respondents.

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer sentiment index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.