Economy

Consumer Sentiment at Nine-Month Low

August 15, 2014

Consumer confidence hit its lowest level in nine months according to the University of Michigan/Thomson Reuters Consumer Sentiment Index. The preliminary sentiment index fell 2.6 points to 79.2 in the August survey, surprising economists who expected an uptick to 82.3 from the final July reading of 81.8.

The survey’s outlook index fell to 66.2 from 71.8. Consumers are expecting higher prices in the coming year. The survey’s one-year inflation expectation rose to 3.4 percent from 3.3 percent, while the survey’s five-to-10-year inflation outlook rose to 2.8 percent from 2.7 percent.

Consumers are pessimistic about wage gains keeping pace with inflation. The recent stock correction is also thought to be a contributor to the weaker sentiment reading for August. Retail sales are another concern, with a Commerce Department report last week showing that July sales had stalled, not reaching economist expectations of a 0.2 increase.

“While the data implies differential prospects for retailers, consumer confidence remains at moderately positive levels, high enough to support a continued expansion in personal consumption during the year ahead,” said survey director Richard Curtin in a statement.

Although the consumer sentiment index fell, the barometer of current economic conditions rose higher than expected to 99.6 from 97.4—the highest level since July 2007.