US consumer sentiment sees largest one-month drop in seven years, UofM says
By Alexander Bueso
Date: Friday 30 Aug 2019
(Sharecast News) - US consumer sentiment failed to rebound in the final half of August amid many Americans' concern of falling off the proverbial 'tariff cliff', according to the results of a closely-followed survey.
The University of Michigan's consumer confidence index printed at a level of 89.8 at the end of August, versus a preliminary reading of 92.1 that was published roughly fortnight before and the prior month level of 98.4.
Economists had been anticipating a small rebound to 92.5.
Commenting on what was the largest one-month drop in confidence since December 2012, survey director, Richard Curtin, said: "Unlike concerns about the fiscal cliff [in 2012], which were promptly resolved, Trump's tariff policies have been subject to repeated reversals amid threats of higher future tariffs.
"Such tactics may have some merit in negotiations with China, but they act to increase uncertainty and diminish consumer spending at home. Unlike the repeated tariff reversals, negative trends in consumer sentiment cannot be easily reversed."
A sub-index tracking consumer expectations meanwhile dropped from July's level of 90.5 to 79.9, while another linked to their assessment of the current situation dropped from 110.7 to 105.3.
Despite their reduced confidence, Americans' expectations for inflation continued to climb, with those for one-year ahead rising from 2.6% to 2.7% and those looking five years ahead from 2.5% to 2.6%.
Results of a rival survey compiled by the Conference Board and published three days before on the other hand had only revealed a very slight dip in consumer confidence.
But according to analysts at Deutsche Bank, that divergence between the two surveys was in fact sending "a troubling signal".
Ahead of Friday's report While a few popular market signals have been flashing red for some time, the spread between 10-year and 2-year Treasury yields recently became the last shoe to drop in terms of yield curve inversions. These market signals appear at odds with what have been generally supportive signs about the health of the US consumer," they said.
"However, we show that the recent divergence in sentiment between the Conference Board and University of Michigan consumer surveys is sending a more troubling signal."
Special promo:
Trading the Forex Market? Visit FXmania.com to get advanced infomation about currencies and the Foreign Exchange
Market.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN