The preliminary Thomson-Reuters/University of Michigan consumer sentiment index for September finds an uptick in consumer confidence, but a drop in expectations for the economy.
The panicked days of August have given way to the more cautiously optimistic days of September, according to a preliminary Thomson-Reuters/University of Michigan consumer sentiment index. After plunging to 55.7--a three-year low-- from July’s reading of 63.7, the index ticked up to 55.8.
August was indeed the worst of times. Beyond the debt downgrade and subsequent market sell-off, regional and state unemployment rates showed little change last month, according to the Commerce Department. Twenty-six states and the District of Columbia reported unemployment increases, while the national jobless rate remained at 9.1 percent.
The consumer pessimism reflected in the August index was attributed to “lost confidence in the ability of the government to enact policies that would counteract the growing threat of a new recession,” Surveys of Consumers Chief Economist Richard Curtin noted last month, adding in a statement that never before in the history of the surveys had so many respondents spontaneously mentioned negative aspects of the government’s role in the economy, while economic policies also received unprecedented unfavorable ratings.
The Thomson Reuters/University of Michigan Survey of Consumers is based on telephone interviews conducted throughout the month that assess how consumers feel about their economic situation and business and buying conditions.
The consumer sentiment index generally falls in the range of 90 to 100 in a strong economy, but it has been in the 60s to 70s range throughout the spring and early summer. The preliminary report reflects a whipsaw of consumer attitudes about the economy. The index of current conditions, which surveys Americans’ perceptions about their own financial situation and whether it is a good time to purchase big-ticket items, increased to 74.5 from 68.7 in August.
But expectations for the economy fell from 47.4 to 47, the lowest level since May 1980. Three out of four consumers expect hard times for the economy, while only 17 percent surveyed expect their finances to improve. This is the lowest rate ever recorded, according to Reuters.
These concerns correlate to a 2011 wealth level study conducted by Millionaire Corner of households with a net worth between $100,000 and $1 million, who expressed more concern than last year over the national debt, tax increases, inflation and the political environment.