RTTNews - Friday morning, Reuters and the University of Michigan released their preliminary report on consumer sentiment in the month of August, showing that their consumer sentiment index unexpectedly decreased compared to the previous month.
The report showed that the consumer sentiment index fell to a reading of 63.2 in August from a reading of 66.0 in July. The decrease came as a surprise to economists, who had been expecting the index to increase to 69.0.
With the unexpected decrease, the consumer sentiment index fell for the second consecutive month, dropping to its lowest level since March.
Consumers reported much less favorable assessments of their personal finances even as they were more likely to expect improved conditions in the national economy, the Reuters/University of Michigan Surveys of Consumers said in a statement.
A notable deterioration in consumers' assessment of current conditions contributed to the unexpected decrease in consumer sentiment, with the current-conditions index falling to 64.9 in August from 70.5 in July.
The report also showed a modest deterioration in consumers' expectations, with the expectations index slipping to 62.1 in August from 63.2 in July.
Commenting on the data, Peter Boockvar, equity strategist for Miller Tabak, said, Bottom line, it is clear that a still tough labor market, worries about one's job and too much household debt are still plaguing the confidence of the average person.
The tenuous balance sheet state of the consumer is the disease at the center of the downturn and it will only be their recovery that will put growth on a long term sustainable path, Boockvar added.
The report also showed a dip in inflation expectations, with consumers now expecting prices to rise 2.8 percent over the next year compared to the 2.9 percent increase expected in July. Five-year inflation expectations fell to 2.9 percent in August from 3.0 percent in July.
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