Advertisement
YOU ARE HERE: LAT HomeCollections

Consumer sentiment falls back in August

August 16, 2013|By Don Lee
  • How are consumers feeling about the economy? According to a survey, they're not as optimistic in August as they were in July.
How are consumers feeling about the economy? According to a survey, they're… (Luke Sharett / Bloomberg )

WASHINGTON -- After hitting a six-year high last month, consumers lost some of their gusto in August as news of slower job growth and the latest slide on Wall Street probably sapped some optimism.

A closely followed index of consumer sentiment dropped to 80 this month after climbing to a post-recession high of 85.1 in July, according to a survey by the University of Michigan and Reuters, released Friday.

Analysts on average were expecting a slight improvement in sentiment for early this month, reflecting a dip in gas prices and continued gains in the housing market.

But the recent retreat in stock prices may have dampened confidence. Interviews for the latest survey ended Thursday.

ASK LAZ: David Lazarus answers reader questions

What's more, economist Amna Asaf of Capital Economics pointed to rising long-term interest rates as a likely factor, along with reports of softer hiring by employers last month.

The expectations part of the index fell to a four-month low, while there was a more modest decline in people's feelings about current conditions.

"Real average earnings growth has been virtually non-existent for several years, and most of the job gains in 2013 have been disproportionately weighted toward part-time positions," said Nate Kelley, an economist at Moody's Analytics, in a note to clients on Friday's report. "Hence, outside of rising home and stock prices, consumers have very little to support a brighter outlook."

Even so, the sentiment index remains well above year-ago levels, and analysts don't think the latest report signals a big change in the outlook for improved consumer spending, which accounts for about 70% of  U.S. economic activity. Asaf, for one, said he still sees consumption growth in the current quarter rising close to 2.5%, compared with the second quarter's moderate 1.8% annual rate.

ALSO:

Stocks drop sharply on Fed stimulus fears

Housing starts increase nearly 6% in July

New jobless claims fall to near six-year low

Advertisement
Los Angeles Times Articles
|
|
|