FILE PHOTO: Shoppers carry bags of purchased merchandise at the King of Prussia Mall, United States’ largest retail shopping space, in King of Prussia, Pennsylvania, U.S., December 8, 2018. REUTERS/Mark Makela
August 13, 2021
By Evan Sully and Lindsay Dunsmuir
(Reuters) -U.S. consumer sentiment dropped sharply in early August to its lowest level in a decade as Americans gave faltering outlooks on everything from personal finances to inflation and employment, a survey showed on Friday.
The University of Michigan said its preliminary consumer sentiment index fell to 70.2 in the first half of this month 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.
Economists polled by Reuters had forecast the index would remain unchanged at 81.2.
U.S. stock market indexes slipped immediately after the report was released, while the price of gold, a safe-haven investment, gained ground. U.S. Treasury bond yields hit session lows.
Economic growth is still expected to grow this year at its fastest pace in four decades after falling into a brief recession in 2020 caused by the coronavirus pandemic.
However, the recovery is showing some indication of cooling off and COVID-19 cases have doubled in the past two weeks to reach a six-month peak as the more transmissible Delta variant spreads rapidly across the country. Labor shortages across the service sector also persist while supply chain disruptions have continued.
The survey’s gauge of current economic conditions also declined to a reading of 77.9 from 84.5 in July. The losses were widespread across income, age, and education subgroups and spanned all regions.
“The pandemic’s resurgence due to the Delta variant has been met with a mixture of reason and emotion,” Richard Curtin, the survey director, said in a statement. “Consumers have correctly reasoned that the economy’s performance will be diminished over the next several months, but the extraordinary surge in negative economic assessments also reflects an emotional response, mainly from dashed hopes that the pandemic would soon end.”
Its measure of consumer expectations slid to 65.2 from 79.0 in July. The survey’s one-year inflation expectation edged lower to 4.6%, down from 4.7%, while its five-year inflation outlook ticked up to 3.0% from 2.8% in July.
Consumer price increases slowed in July, the Labor Department said on Wednesday, but inflation overall remained at a historically high level amid lingering supply-chain disruptions and stronger demand for travel-related services.
(Reporting by Evan Sully and Lindsay Dunsmuir; Editing by Chizu Nomiyama)
Source: One America News Network
