(A shopper leaves the Gap with a bag in New York City. (Photo: REUTERS)
U.S. consumer sentiment dropped to its lowest level since September last year, a survey released on Friday showed. The University of Michigan’s preliminary reading on the overall consumer sentiment index for September fell to 85.7, juxtaposed with the final reading of 91.9 posted in August. The index came in much lower than the median forecast of 91.2 among economists polled by Reuters, and September’s consumer sentiment index was the lowest since September 2014.
“The decline in optimism narrowed in early September from late August as consumers grew somewhat more confident that the underlying strength in the domestic economy would insure a continued expansion,” said Surveys of Consumers chief economist, Richard Curtin. “The twin strengths of higher employment and lower prices softened the impact from the losses in household wealth.”
The survey’s barometer of current economic conditions decreased to 100.3 from 105.1 in August, which was below economists’ media forecast of 103.6. The current conditions reading was the weakest since October 2014. The survey’s gauge of consumer expectations fell to a one-year low of 76.4 from 83.4 in August and was way below an expected 82.8.
Preliminary Consumer Sentiment Results for September 2015
| Sep | Aug | Sep | M-M | Y-Y | |
| 2015 | 2015 | 2014 | Change | Change | |
| Index of Consumer Sentiment | 85.7 | 91.9 | 84.6 | -6.7% | +1.3% |
| Current Economic Conditions | 100.3 | 105.1 | 98.9 | -4.6% | +1.4% |
| Index of Consumer Expectations | 76.4 | 83.4 | 75.4 | -8.4% | +1.3% |
“To be sure, consumers still anticipate a weaker domestic economy due to the global slowdown and are less optimistic about future growth in jobs and wages than they were a few months ago. While the current strength in consumer spending is still likely to persist in the year ahead, the more lasting impact of recent events may be a heightened attentiveness by consumers to potential negative developments,” Curtin added. “Without this recent shift in focus, consumers would have been more likely to view the Fed’s interest rate hike as confirming their prevailing optimism, but with the shift, it could be taken as a signal for a slower pace of future economic growth.”
The survey’s one-year inflation expectation came in at 2.9 percent in September, inching up from 2.8 percent in August. The survey’s five-year inflation outlook was 2.8 percent, also slightly up from 2.7 percent in August.
