Higher inflation and the growing Delta variant of the coronavirus have made a big bite out of U.S. consumer attitudes.
Per Bloomberg
U.S. consumer sentiment remained weak in late August amid continuing concerns about inflation and the coronavirus pandemic.
The University of Michigan’s final sentiment index fell to a nearly decade-long low of 70.3 during the month, from July’s 81.2, according to data released Friday. The figure was in line with the preliminary reading and just below the average estimate of 70.8 in a survey of Bloomberg economists.
“Extreme consumer reactions were due to the growing Delta variant, higher inflation, slower wage growth and lower unemployment,” said Richard Curtin, director of the survey, in a statement. communiqué.
“The extraordinary drop in sentiment also reflects an emotional response, based on hopes that the pandemic will end soon and lives can return to normal without the imposition of strict Covid rules,” he said.
If the fall in confidence translates into a decline in spending, economic growth may slow further in the coming months.
The investigation period, from July 28 to August 23, also coincided with the Taliban’s acquisition of Afghanistan and the start of the chaotic evacuation operation of American and Afghan citizens.
Respondents said they expected inflation to rise 2.9% over the next five to ten years, the three-month high. They expect prices to advance 4.6% over the next year, almost shy of the 4.7% seen in the July survey, which was the highest in more than a decade.
Serious supply chain disruptions and a wider reopening of the economy have fueled rapid price gains for a variety of goods and services. Rising rents and house prices are further burdening the finances of Americans.
Meanwhile, the recent increase in Covid-19 cases has disrupted plans to return to the office and back to school, forced the cancellation of events and led many cities to reintroduce the mandates of Covid-19. masks.
A measure of expectations fell further in the second half of the month and fell to 65.1 from 65.2 in the preliminary reading, still the lowest since 2013. The current conditions indicator improved slightly with respect to at the initial reading, but remains the weakest since April last year at 78.5.
The Conference Board on Tuesday will publish an alternative method of consumer sentiment, which places more emphasis on labor market views.