Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. Consumer Sentiment Drops to Seven-Month Low on Trade Fears

Stock MarketsAug 16, 2019 10:12AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. U.S. Consumer Sentiment Drops to Seven-Month Low on Trade Fears

(Bloomberg) -- U.S. consumer sentiment plummeted to a seven-month low in August on growing concerns about the economy even as the labor market shows few signs of weakening from robust levels.

The University of Michigan's preliminary sentiment index slumped to 92.1 from July’s 98.4, missing all forecasts in Bloomberg's survey of economists. The gauge of current conditions decreased to 107.4 while the expectations index dropped to 82.3, bringing both readings to the lowest levels since early this year.

Key Insights


  • The second-lowest confidence reading of Donald Trump's presidency shows consumers may be poised to offer less of a boost to the record economic expansion amid volatility in financial markets and headwinds from abroad. Personal consumption, the biggest part of the economy, was the largest driver of the expansion in the second quarter.

  • The biggest drop in confidence since January underscores how growing odds of a recession before the 2020 election threaten to dim Trump’s chances of winning a second term. Measures of consumer sentiment by political party showed that confidence for Republicans fell to the lowest of Trump's term. Readings for independents dropped while those for Democrats improved.

  • Consumers “strongly reacted” to the proposed increases in tariffs on Chinese goods, a subject that was spontaneously cited by 33% of those surveyed, near the recent peak of 37%, according to the report. Americans also concluded, following the Federal Reserve's first interest-rate cut in a decade, that they may need to be more cautious about spending in anticipation of a potential recession, the report said.

  • The July 31-Aug. 14 survey period corresponded with an especially volatile period: The Fed rate cut, Trump raised tariffs on consumer goods from China then delayed some, and signs of global malaise multiplied.

  • Markets convulsed in those two weeks. U.S. stocks posted their two steepest drops of the year while yields on 30- year Treasury bonds fell to record low and 10-year yields dipped below the two-year in a harbinger of recession in the next 18 months.

Official's View

“The main takeaway for consumers from the first cut in interest rates in a decade was to increase apprehensions about a possible recession,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement. “Consumers concluded, following the Fed’s lead, that they may need to adopt a precautionary spending outlook in anticipation of a potential recession.”

Get More


  • The Michigan data follow the Bloomberg Consumer Comfort Index’s second-straight drop in the week ended Aug. 11, marking the largest back-to-back slide since 2011. The Conference Board’s confidence gauge rebounded in July to near the best level in 18 years.

  • Consumer expectations for inflation rose, climbing to 2.7% from 2.6% for the coming year and increasing to 2.6% from 2.5% for the next five years. The inflation readings follow findings released earlier this week in the New York Fed's Survey of Consumer Expectations, showing three-year inflation expectations slipped to a two-year low of 2.6% in July.

A measure of buying conditions for household durable goods fell to the lowest since 2015. Expectations for personal finances retreated from the best level since 2003.


©2019 Bloomberg L.P.

U.S. Consumer Sentiment Drops to Seven-Month Low on Trade Fears
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email