25 September 2020

Consumer Sentiment Slips To Lowest Level Since April

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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 slower economy.

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 added.

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.

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