Consumer Sentiment Falls to Lowest Level in almost a Year

The University of Michigan’s consumer sentiment final index for the month decreased to 87.2, the lowest level since October, from 91.9 in August. Despite being at the lowest level in 11 months, August’s reading was still higher than in any month prior to May 2007.

A late-month boost among wealthier Americans kept consumer sentiment from falling as much as forecast in September, indicating some households are starting to look beyond the recent turmoil in financial markets.

Richard Curtin, chief economist for the survey, said consumers are disturbed by signs of trouble in the Chinese economy, the world’s second-biggest, and continued economic stress in Europe. The Index of Consumer Expectations fell 5.2 points to 78.2, but grew 3.7 percent year over year. “While now small, the global economy influence is certain to rise in the future and prompt widespread adjustments by consumers and policymakers”. The survey’s barometer of current economic conditions dropped to 101.2 from 105.1 in August. These concerns fed through consumers’ perception of both current conditions and expectations, but affected current conditions more noticeably.

The Survey of Consumers is a rotating panel survey based on a nationally representative sample that gives each household in the coterminous U.S.an equal probability of being selected.