US consumer sentiment plummets to decade low
US consumer sentiment fell sharply this month to its lowest level in a decade in a worrying indication of Americans’ outlook on economic recovery.
The University of Michigan’s preliminary consumer sentiment index fell to 70.2 in the first half of August from a final reading of 81.2 in July. That was the lowest level since 2011, and there have been only two larger declines in the index over the past 50 years.
These were at the depths of the 2007-2009 recession and during the first wave of shutdowns in April 2020 at the beginning of the pandemic.
The survey took into account a range of considerations including personal finances to inflation and employment.
The downturn was registered across income, age and education demographics and spanned all regions of the US.
The surprise reading could give Federal Reserve policymakers pause if it translates in the months ahead to a dent in economic activity.
The central bank has been getting closer to a decision on when to begin pulling back the extraordinary stimulus it put in place to shield the economy from the Covid pandemic.
Major US indices slipped immediately after the report, but soon shrugged off the data to make new gains.
“Fresh records for the Dow and S&P 500 in the opening minutes of trading this afternoon have confirmed the bullish trend of the past few days, with US indices undeterred by a drop in consumer confidence to levels not seen in almost a decade,” said Chris Beauchamp, chief market analyst at IG.
“It has been a volume-light week for equity markets despite the excitement surrounding all the US price data we’ve received this week, but the bulls have come out on top once again, shrugging off fears of a Friday the 13th-related hiccup.”