Consumer Sentiment Gauge Holds at Lowest Since April
Consumer sentiment in September held at the lowest level since April, as people became more optimistic about the economic outlook but less sanguine about their incomes and buying plans.
The University of Michigan’s preliminary index of sentiment was unchanged at 89.8, according to a Sept. 16 report. The median projection in a Bloomberg News survey called for a reading of 90.6.
Consumers’ views of current economic conditions fell to an almost one-year low, while households’ plans to purchase automobiles and other big-ticket items became more dependent on low interest rates. Retail sales fell in August for the first time in five months, hinting at a smaller rebound in the economy this quarter, and the Federal Reserve is expected to hold off from raising interest rates when policymakers meet Sept. 20-21.
“I don’t think this pause, and I would call it a pause, will turn into a rout,” as consumers adjust their spending to their expectations on prices and income growth, Richard Curtin, director of the Michigan survey, said on a conference call. “I still see the Christmas retail season as pretty good.”
Estimates in the Bloomberg survey ranged from 88 to 93. The Sept. 16 figure compares with an average consumer sentiment reading of 92.9 in 2015 and 91.5 in the first eight months of this year.
The current conditions index, which is an assessment of the state of personal finances, dropped to 103.5, the lowest since October, from 107 in August.
Among all households, 42% reported an improvement in their financial situation this month, down from 49% three months ago.
A gauge of expectations for the next six months improved to 81.1 from 78.7 last month.
Inflation expectations for the next year dropped to 2.3% compared with 2.5% in August. Over the next five to 10 years, Americans expected prices to rise 2.5%, matching a record low.
A separate report on Sept. 15 showed consumer prices in August rose more than projected because of faster gains in shelter and health-care costs.
