ECON: Consumer Sentiment Much Weaker Than Expected
- Sentiment 80.0 vs 85.5 Forecast
- Current Conditions 91 vs 98
- Expectations 72.9 vs 76.0
- 12-mo Outlook 92 vs 104
- Sentiment and Expectations Lowest Since April
Market Reaction: a few ticks of positivity at first, and we're far from finding out where the day will end, but so far, markets are trading it like it's not quite enough weakness to suggest pushing back QE tapering expectations--especially from a report with no employment metrics. That said, we're not losing ground either.
(Reuters) - U.S. consumers, bracing for higher interest rates and slightly slower economic growth, were a bit less optimistic in August as sentiment retreated from last month's six-year high, a survey released on Friday showed.
The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment slipped to 80.0 from 85.1 in July, the highest since July 2007.
August's result was well below the 85.5 reading expected by economists.
Consumers' view of current economic conditions showed the biggest decline, and most expected the pace of growth to ease slightly. However, these changes were not large enough to upend "the prevailing view that the economic expansion will continue," survey director Richard Curtin said in a statement.
"Perhaps the most important recent changes have been the increase in home values as well as the jump in the numbers that expect interest rate increases during the year ahead," he added.
Long-term interest rates have risen by more than a full percentage point over the last three months on the view that the Federal Reserve will start scaling back as soon as next month its hefty support for the economy.
That has pushed up mortgage rates, which could sap some of the strength from a housing recovery that has been pushing prices higher for more than a year.