US consumer sentiment falls to near-decade low in August

Bloomberg

US consumer sentiment remained weak in late August amid ongoing concerns over inflation and the coronavirus pandemic.
The University of Michigan’s final sentiment index falls to a near-decade low of 70.3 during the month from 81.2 in July, data showed. The figure was in line with the preliminary reading and just below the median estimate of 70.8 in a Bloomberg survey of economists.
“Consumers’ extreme reactions were due to the surging Delta variant, higher inflation, slower wage growth, and smaller declines in unemployment,” Richard Curtin, director of the survey, said in a statement.
“The extraordinary falloff in sentiment also reflects an emotional response, from dashed hopes the pandemic would soon end and lives could return to normal without re-imposition of strict Covid-19 regulations,” he said.
If the slide in confidence translates to a pullback in spending, economic growth may decelerate further in the coming months.
The survey period, July 28 to August 23, also coincided with the Taliban’s takeover of Afghanistan and the start of the chaotic evacuation operation of US and Afghan citizens.
Respondents said they expect inflation to rise 2.9% over the next five to ten years, a three-month high. They expect prices to advance 4.6% over the next year – just shy of the 4.7% seen in July survey, which was highest in more than a decade.
Severe supply chain disruptions and a broader reopening of economy fuelled swift
price gains for a variety of goods and services. Soaring rents
and home prices are further
burdening Americans’ finances.
Meantime, the recent surge in Covid-19 cases has disrupted return-to-office and back-to-school plans, forced the cancellation of events and led many cities to reintroduce mask mandates.
A measure of expectations dipped further in the second half of the month, falling to 65.1 from 65.2 in the preliminary reading, still the lowest since 2013. The current conditions gauge improved slightly from the initial reading but remains its weakest since April of last year at 78.5.
An alternative gauge of consumer sentiment — which places greater emphasis on views of the labour market — will be released by the Conference Board this week.