US consumer sentiment deteriorates in August
Consumer sentiment in the US deteriorated in August, hitting its lowest level since the start of the year, according to a preliminary reading from the University of Michigan.
The consumer sentiment index fell to 92.1 from 98.4 in July and 96.2 in August last year.
Meanwhile, the current economic conditions index declined to 107.4 this month from 110.7 in July and 110.3 in the same month a year ago. This was the lowest level for the index since late 2016.
The index of consumer expectations came in at 82.3 compared to 90.5 last month and 87.1 in August 2018.
Surveys of Consumers chief economist Richard Curtin said: "Monetary and trade policies have heightened consumer uncertainty - but not pessimism - about their future financial prospects. Consumers strongly reacted to the proposed September increase in tariffs on Chinese imports, spontaneously cited by 33% of all consumers in early August, barely below the recent peak of 37%. Although the announced delay until Christmas postpones its negative impact on consumer prices, it still raises concerns about future price increases.
"The main takeaway for consumers from the first cut in interest rates in a decade was to increase apprehensions about a possible recession. Consumers concluded, following the Fed’s lead, that they may need to reduce spending in anticipation of a potential recession. Falling interest rates have long been associated with the start of recessions. Perhaps the most important remaining pillar of strength for consumer spending is favourable job and income prospects, although the August survey indicated some concerns about the future pace of income and job gains. It is likely that consumers will reduce their pace of spending while keeping the economy out of recession at least through mid-2020."