You are here
NEW YORK - A depressed job market and stock market losses pushed U.S. consumer sentiment in early October to its lowest level in nine years, raising concerns the consumer-driven recovery could be in jeopardy, Reuters reports.
The University of Michigan's preliminary October consumer sentiment index fell sharply to 80.4 from 86.1 in September, market sources said on Friday.
The drop was far bigger than analysts had expected and brings the index down to its lowest level since September 1993, when the economy was last emerging from a recession.
The drop was led by a steep fall in the expectations index, which measures attitudes about the 12 months ahead, to a preliminary reading of 72.4, its lowest level since Nov. 1993. That was down sharply from September's final reading of 79.9.
The current conditions index, which correlates more closely with spending, fell in early October to 92.9, its lowest level since 1992, from 95.8 in late September.
So far consumer spending, which drives about two-thirds of the U.S. economy, has remained robust, in part due to the lowest interest rates and mortgage rates in over a generation. But an earlier report that said retail sales fell 1.2 percent in September provided evidence that pace is already slowing.
"The consumer is coming under growing pressure from the relentless slide in equity prices, weak labor market conditions and the uneasiness over possible war with Iraq. This is a potentially disturbing trend which increases the pressure on the Fed to implement further monetary policy accommodation," Anthony Karydakis, economist at Banc One Capital Markets, told Reuters.
Much of the drop in September retail sales was due to auto sales. Within the September report, gains were concentrated in only three areas -- building materials, health and personal care as well as sporting goods and bookstores.
People ate out less, sending sales at bars and restaurants down by 0.4 percent in September, following a 0.2 percent increase. At food stores, sales fell by 0.4 percent, on top of a 0.2 percent decline.