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Consumer Confidence Slips
US consumer confidence fell slightly in September due to rising oil prices and increased concern about slow growth in employment. The University of Michigan's Index of Consumer Sentiment edged down from 95.9 in August to 94.2 in September, but is still well above the 87.7 recorded last September.
Consumers' evaluation of their personal financial situation is somewhat depressed due to high gas prices, sluggish job growth, and smaller expected wage gains - noticed increasingly by households with higher than average incomes as well as lower earners.
The companion Expectations Index was almost unchanged at 88.0, also well up on last September (80.8).
According to Richard Curtin, the Director of the university's Surveys of Consumers, the September loss in confidence was quite small, 'reflecting a continuation of the sideward movement that has dominated since the start of the year rather than indicating an emerging downturn'. Curtin says that the news reaching consumers about recent economic developments turned decidedly negative in the September survey: 'Consumers reported hearing about job losses more than twice as frequently as job gains in September, exactly the opposite of what they reported just two months ago'.
As a result, consumers no longer anticipate any further reductions in the unemployment rate during the year ahead: most think it will remain substantially unchanged. Over five years there is as usual more optimism, with consumers expecting the expansion will persist without interruption despite a slower overall pace of growth.
Consumers actually felt better about mortgages, despite the repeated increases in interest rates by the Fed, seeing an advantage in purchasing homes at unexpectedly low mortgage rates; and the vehicle purchase climate is also considered better with domestic buyers 'emboldened by their ability to exact deeply discounted prices and interest rates from vehicle manufacturers' according to Curtin.
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