According to the latest Thomson Reuters/University of
Michigan consumer sentiment survey, optimism fell to its lowest level since
April. Consumers are showing concerns about interest rate jumps and a slightly
Long-term interest rates have
risen by more than a point over the last three months based on concerns the
Federal Reserve will start scaling back its massive bond-buying program. Rates
shot up with indications that the support could start to taper off as soon as September.
The result has been higher mortgage
rates, which could slow thee housing recovery that has seen prices move higher
for more than a year.
The survey showed preliminary consumer sentiment in August fell
to 80.0 from July’s 85.1, the highest since July 2007. The August number was the lowest in four
months and well below the 85.5 reading expected by economists.
The survey showed that consumers
felt the pace of growth of the economy will ease up slightly and their view of
current conditions showed the biggest decline. But these drops were not large
enough to change “the prevailing view that the economic expansion will
continue," said survey director Richard Curtin.
"Perhaps the most important
recent changes have been the increase in home values as well as the jump in the
numbers that expect interest rate increases during the year ahead," he
The survey's measurement of
current economic conditions fell from 98.6 to 91.0. The measure of consumer
expectations slipped from 76.5 to 72.9.