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U.S. Consumer Sentiment Sags as Pricing Concerns Rise
Consumer confidence about the U.S. economy dropped to an 11-month low this month, according to preliminary results by the University of Michigan’s Surveys of Consumers.
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Consumer confidence about the U.S. economy dropped to an 11-month low this month, according to preliminary results by the University of Michigan’s Surveys of Consumers.
The survey detected the largest falloff ever in favorable price perception, deeming the drop “extraordinary.”
Researchers say the decline is especially surprising, since polled consumers expect the U.S. inflation rate will be a relatively mild 2.9% over the next year, unchanged from their view in July. The study suggests U.S. consumers have become far more sensitive to even minor changes in inflation rates than they were in past decades.
The report cites “much less favorable” consumer assessments of buying conditions, mainly because of perceived higher prices. Vehicle-buying conditions plunged to a four-year low, with vehicle prices deemed the least favorable since 1984.
Likewise, the study says overall conditions for buying large household durables sank to their lowest level in nearly four years. Consumers view home-buying conditions as the least favorable in 10 years.
The researchers say the data show consumers have “little tolerance for overshooting inflation targets,” with interest rates playing a more decisive role in purchase decisions.
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