US consumer sentiment falls to lowest in 7 months amid trade uncertainty
US consumer sentiment fell more than expected in August to its lowest level in seven months, data on Friday showed, as monetary and trade policies heightened uncertainty about their financial outlook.
The University of Michigan’s preliminary consumer sentiment survey fell 6.4 per cent to 92.1 in August — the lowest level since January. The reading missed expectations for a more modest dip to 97.2, according to a Reuters survey.
Richard Curtin, chief economist of the surveys of consumers, said consumers “strongly reacted to the proposed September increase in tariffs on Chinese imports”. While the Trump administration then agreed to delay some of those increases till December, he said “it still raises concerns about future price increases”.
The consumer survey also showed the Federal Reserve’s move to deliver a quarter point cut last month, the first by the central bank in a decade and a move intended to stimulate the economy, served to “increase apprehensions about a possible recession”, he said.
“Consumers concluded, following the Fed’s lead, that they may need to reduce spending in anticipation of a potential recession.”
Friday’s report also showed the current conditions index fell to its lowest level since late 2016. Meanwhile the index of consumer expectations fell 9.1 per cent to 82.3.
The caution comes after data on Thursday showed Americans continued to loosen their purse strings in July, however it is worth noting the report preceded Mr Trump’s announcement about tariffs earlier this month.
“It is likely that consumers will reduce their pace of spending while keeping the economy out of recession at least through mid 2020,” Mr Curtin added.