Consumer Sentiment in US Matches Lowest Reading Since 2014
Consumer confidence dropped more than previously reported to match the lowest level since 2014, with Americans less upbeat about both current and future conditions in the weeks before the presidential election.
The University of Michigan said Oct. 28 that its final index of sentiment fell to 87.2 from 91.2 in September. The median projection in a Bloomberg News survey called for 88.2 after a preliminary reading of 87.9 earlier this month. Long-term inflation expectations declined to a record low.
The drop in sentiment suggests that consumer spending may continue to moderate after a separate report on Oct. 28 showed it was less of a driver for third-quarter economic growth than in the previous period. While hiring has been solid and wages are rising, the uncertainty of the election could also be weighing on confidence.
“Prospects for renewed spending gains will depend on continued growth in jobs and wages as well as low inflation and interest rates,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.
Asked about the year-ahead outlook for the economy, 35% of respondents expected good times, the lowest reading since November 2013. “This may be due to the temporary impact of uncertainty aroused by the election,” Curtin said.
The report contrasts with a separate weekly measure of confidence released Oct. 27 that climbed the most since January 2015 on more optimistic views on the outlook for the U.S. economy.
Estimates in the Bloomberg survey of economists for the Michigan index ranged from 87 to 92.5. The Oct. 28 figure compares with the average of 91.4 in the first nine months of this year.
The current conditions index, which measures Americans’ perceptions of their personal finances, declined to 103.2 in October, the lowest in a year, from 104.2 in the prior month.
The gauge of expectations six months from now decreased to 76.8, the weakest since September 2014, from 82.7 in the previous month.
Respondents expected the inflation rate in the next year will be 2.4%, the same as in the September survey. Over the next five to 10 years, they project a record-low 2.4% rate of price growth, after 2.6% in the prior month.
