- The University of Michigan’s consumer sentiment gauge fell to 76.2 from 79 in February.
- The reading is the lowest since August and driven by a plunge in economic expectations.
- Households earning less than $75,000 also dragged on the index, according to the Friday report.
- Visit the Business section of Insider for more stories.
A popular gauge of US consumer sentiment worsened this month as expectations for the country’s rebound faded.
The University of Michigan’s Index of Consumer Sentiment fell to 76.2 from 79 in a preliminary February reading, according to data published Friday. The level is the lowest since August is 24.6% below that seen in the year-ago period.
“This recent softening basically just reversed the jump in sentiment reported between November and December and overall the index has been bouncing around at a low level since dropping early in the pandemic,” Daniel Silver, an economist at JPMorgan, said Friday.
The university’s gauge of economic expectations drove the bulk of the decline, falling to 69.8 from 74 in the early report. That’s also the lowest since August and down significantly from the pre-pandemic reading of 92.1.
Households earning less than $75,000 a year also dragged on the sentiment gauge. The group reported setbacks in current finances, and the share of respondents mentioning recent income gains was the smallest since 2014.
"This recent softening basically just reversed the jump in sentiment reported between November and December and overall the index has been bouncing around at a low level since dropping early in the pandemic," Daniel Silver, an economist at JPMorgan, said Friday.
An improvement to the gauge heavily relies on the path of the virus and new stimulus's effectiveness, Richard Curtin, chief economist for the university's Surveys of Consumers, said in a statement. A new relief package is set to fuel strong economic growth through 2021, but conflicting priorities in Congress make for a difficult balancing act.
"The legislative debate essentially focuses on whether low inflation or full employment is the more important policy goal," Curtin said, adding "favorable trends in both inflation and employment" are required for a rebound in consumer spending.
On a positive note, the university's measure of current economic conditions only fell 0.5 points, to 86.2. The measure was likely bolstered by the accelerating pace of vaccination and declining COVID-19 case counts.
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