Consumer confidence cooled this month, according to new data from the University of Michigan. Specifically, the headline sentiment gauge fell from 97.9 to 95.3 in the first half of August. That was worse than expected, the second monthly decline in a row, and the lowest headline reading since September of last year. Surveyed Americans’ views of current economic conditions deteriorated markedly this month, while outlooks on the future were unchanged. Weighing heavily on confidence in August was inflation, as evidenced by the number of respondents complaining about the prices for large household durables climbing to the highest level in almost a decade.
Reported opinions of the current buying conditions for vehicles and homes also worsened this month, with most of the frustration being voiced by households in the bottom third of the income distribution. Surveys of Consumers chief economist Richard Curtin added that “As is usual at this stage in the business cycle, some price resistance has been neutralized by rising wages, although the falloff in favorable price perceptions has been much larger than ever before recorded. Overall, the data indicate that consumers have little tolerance for overshooting inflation targets, and to the benefit of the Fed, interest rates now play a more decisive role in purchase decisions.”
Sources: University of Michigan
Post author: Charles Couch