U.S. consumer sentiment plunged to a six-month low in June as Americans’ perception of the economy got even more fragile. The Thomson Reuters/University of Michigan’s concluding analysis on the consolidated index on consumer sentiment went down to 73.2 in June from 79.3 in May.
This is the lowest level ever since December and it also failed to meet economists’ anticipations for the index which was to hold at the equal level as June’s first round impression of 74.1. The corrosion in consumers’ outlook emanates mainly from households with incomes over $75,000, as they intended to decrease spending, according to the survey report.
According to Richard Curtin, the survey director, “While the general level of consumer sentiment is substantially above last summer’s low – which would normally indicate a growth slowdown, not a downturn – the buying plans of upper-income households have also sharply declined,”. “Since these households account for a large share of total spending, if the declines continue in the months ahead, it could have a substantial impact on total spending”, he opines.
Also, by and large the computation of buying plans for durables and vehicles touched a low to 125 from 132, while the news bulletins concerning the economic developments grabbed by consumers were negative, substantially. The survey respondents anticipate the unemployment rate to further go high instead of declining.
Notably, the survey’s indicator of present economic scenario plunged to 81.5 from 87.2, whereas the estimation of consumer expectations slipped to 67.8 as against 74.3. The survey’s one-year inflation outlook increased since March to 3.1 percent against 3.0 percent, and its’ five-to-10-year inflation projection stood-up to 2.8 percent against 2.7 percent. So, unfortunately, distress about the job market offsets the boons of lower gas prices which usually leads to a wave of increased consumer spending.
According to AAA, the price of a gallon of gas has decreased by 54 cents since reaching a high of $3.94 in April. Still, the Dow Jones industrial average shot high by more than 200 points. The Conference Board’s sentiment index fell to 62, which is a five- month low-down, from a revised 64.4 in May, according to a New York-based private research group.