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Last Update: 14-Oct-11 10:46 ET
Consumer Sentiment Falls in September, Outlook on the Economy Weakens
The preliminary reading of the October University of Michigan Consumer Sentiment Index dropped from 59.4 in September to 57.5 in October. The Briefing.com consensus expected consumer sentiment to increase modestly to 60.0.
The consumer expectations index fell to its lowest level since May 1980, dropping from 49.4 in September to 47.0 in October. To put that into perspective, when the U.S. was in its worst recession since the Great Depression, consumers were less concerned about the future than they are today. This is most likely the result of media reports constantly flashing high probabilities of another recession and not from economic fundamentals.
The current economic conditions index fell to 73.8 in October from 74.9 in September. While the drop in current conditions is disappointing, it follows an unexpected, and undeserved, increase in September. The current level is close to where we expect it to be considering weakness in equity prices and employment growth.
Fortunately, the drag on sentiment will most likely not have an adverse effect on consumption. Consumption tends to follow income, and income growth, while weak, remains positive.
The consumer expectations index fell to its lowest level since May 1980, dropping from 49.4 in September to 47.0 in October. To put that into perspective, when the U.S. was in its worst recession since the Great Depression, consumers were less concerned about the future than they are today. This is most likely the result of media reports constantly flashing high probabilities of another recession and not from economic fundamentals.
The current economic conditions index fell to 73.8 in October from 74.9 in September. While the drop in current conditions is disappointing, it follows an unexpected, and undeserved, increase in September. The current level is close to where we expect it to be considering weakness in equity prices and employment growth.
Fortunately, the drag on sentiment will most likely not have an adverse effect on consumption. Consumption tends to follow income, and income growth, while weak, remains positive.
