Consumer sentiment inched up in early September, but Americans remained gloomy about the future with a gauge of expectations falling to the lowest level since 1980, a survey released on Friday showed.
The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment edged up to 57.8 from 55.7 the month before, which had been the lowest level since November 2008. It topped the median forecast of 56.5 among economists polled by Reuters.
Overall, the data indicate that a renewed downturn in consumer spending is as likely as not in the year ahead, survey director Richard Curtin said in a statement.
Even without a downturn, consumer spending will not be strong enough to enable the rapid job growth that is needed to offset reduced long-term expectations.
The gauge of consumer expectations dipped to 47.0 from 47.4. It was the lowest level since May 1980. The economic outlook for the next 12 months fell to 38 from 40, the lowest since February 2009 when the world economy was gripped by the credit crisis.
Still, the survey's barometer of current economic conditions gained to 74.5 from 68.7, and better than a forecast of 68.0.
There was little reaction in financial markets immediately following the data with U.S. stocks higher as European policymakers gathered to discuss the region's debt crisis.
Confidence still remains disturbingly low. It was certainly nice to see the current conditions index rise again, but all we did was retake some ground to where we were in July, said Tom Porcelli, senior U.S. economist at RBC Capital Markets in New York.
I don't think this report is important for the Fed meeting next week, but I do think the overall lack of consumer confidence will be very important.
Consumers have become increasingly pessimistic about the strength of the recovery this year amid worries the U.S. economy could fall back into recession. A recent Reuters poll of economists put the odds at one in three.
Confidence in economic policies remained near historic lows after being damaged by political wrangling over raising the U.S. debt ceiling. Three out of four consumers expected bad times for the economy in the year ahead. Only half of respondents said the same at the beginning of the year.
The survey's one-year inflation expectation rose to 3.7 percent from 3.5 percent, while the survey's five-to-10-year inflation outlook rose to 3.0 percent from 2.9 percent.
(Reporting by Leah Schnurr, additional reporting by Emily Flitter; Editing by Padraic Cassidy)