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Consumer Sentiment Drops to 7-Month Low on Economic Growth Fears

Image: Consumer Sentiment Drops to 7-Month Low on Economic Growth Fears

Friday, 29 Apr 2016 12:48 PM

Consumer confidence fell to a seven-month low in April as Americans’ expectations about economic growth dropped to the lowest point since September 2014.

The University of Michigan final index of sentiment declined to 89 from 91 in March. The median projection in a Bloomberg survey of economists was 90. The preliminary reading for this month was 89.7.

Worker pay that’s advanced slowly during the expansion and the ongoing negativity in the presidential election campaign have left Americans guarded. While households viewed their finances as currently favorable, they’re saving more in the event that employment softens along with wage growth.

“The top concerns of consumers involve whether the slowdown in economic growth will result in a slower pace of income and job gains, and growing uncertainty about future economic policies depending on the outcome of the presidential election,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement. “On both counts, consumers have already adopted a more defensive stance.”

Estimates in the Bloomberg survey of economists ranged from 88 to 92. The gauge averaged 92.9 last year, the best annual performance since 2004.

The sentiment report’s measure of expectations six months from now decreased to 77.6 from 81.5.

For the year ahead, respondents anticipated income gains of 1.2 percent, the smallest in the past year. More also expected the unemployment rate to increase.

Government Policies

“When asked to identify what economic news they had recently heard, negative references to the election and government policies rose to 18 percent in April, up from 10 percent last month,” Curtin said.

The current conditions index, which takes stock of Americans’ view of their personal finances, rose to 106.7 from the prior month’s 105.6.

Consumers projected the inflation rate in the next year will be 2.8 percent, up from 2.7 percent in the March survey. Over the next five to 10 years, they expect a 2.5 percent rate of inflation, matching the lowest in records to 1979. It was 2.7 percent the previous month.

Other recent reports on household confidence have been mixed. The Conference Board’s index of consumer confidence declined more than forecast this month, with a measure of household expectations falling to a more than two-year low. The weekly Bloomberg Consumer Comfort Index rose to 43.4 in the period ended April 24, from 42.9.

The labor market is behind much of the improvement in consumer confidence in the past year or two. The economy added an average 225,000 workers to monthly payrolls since the start of 2015. The jobless rate of 5 percent in March is hovering near an eight-year low. At the same time, wage growth is stuck in the 2 percent to 2.5 percent range since the expansion began in mid-2009.


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Consumer confidence fell to a seven-month low in April as Americans' expectations about economic growth dropped to the lowest point since September 2014.The University of Michigan final index of sentiment declined to 89 from 91 in March. The median projection in a Bloomberg...
consumer, economy, confident, sentiment
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2016-48-29
Friday, 29 Apr 2016 12:48 PM
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