US consumer sentiment hits lowest level since September 2015

Consumer sentiment in the US unexpectedly deteriorated in October, according to preliminary figures released on Friday, dropping to its lowest level since last September and the second-lowest in the past two years.

The University of Michigan’s preliminary reading of the consumer sentiment index fell to 87.9 in from 91.2 in September and 90.0 in October last year. Economists had been expecting a reading of 91.9.

The current economic conditions index edged up to 105.5 from 104.2 in September and 102.3 in the same month last year.

Finally, the index of consumer expectations declined to 76.6 in October from 82.7 the month before and 82.1 in October 2015.

Surveys of Consumers chief economist Richard Curtin said: “The early October loss was concentrated among households with incomes below $75,000, whose index fell to its lowest level since August of 2014. In contrast, confidence among upper income households remained unchanged in early October from last month, and more importantly, at a level that was nearly identical to its average in the prior twenty-four months (98.3 versus 98.2).

“Perhaps the most concerning figure was a decline in the expectations index, which fell to its lowest level in the past two years, again mainly due to declines among households with incomes below $75,000. It is likely that the uncertainty surrounding the presidential election had a negative impact, especially among lower income consumers, and without that added uncertainty, the confidence measures may not have weakened.”

Capital Economics said: "Overall, despite the fall in October, the bigger picture is that the University of Michigan index remains consistent with real consumption growth of more than 3% annualised. Admittedly, the recent data suggest that third-quarter consumption growth was closer to 2.5%, while a further slowdown appears likely over the rest of the year. But the relative stability of consumer confidence does at least suggest that a more serious downturn remains unlikely."