Consumer sentiment at 7-month low in April

Consumer sentiment hit a seven-month low in April amid concerns about gasoline prices, inflation and the housing market, according to the Reuters/University of Michigan Surveys of Consumers report released today.
The Consumer Sentiment Index declined for the third month in a row to 87.1 points from March’s 88.4. The reading – though an improvement from the survey’s preliminary April estimate of 85.3 points –
was the lowest since August’s 82.0 points, according to Bloomberg News.
Consumers in the survey predicted inflation would rise. They forecast an inflation rate one year from now of 3.3 percent – the highest since the August survey – compared with last month’s one-year prediction of 3.0 percent, Bloomberg said. Over the next five years, they predicted inflation will rise 3.1 percent.
The survey’s consumer expectations index, considered an indicator of future spending, fell to 75.9 points – the lowest since August – from March’s 78.7 . That’s bad news for the U.S. economy, where consumer spending accounts for two thirds of all activity.
“Certainly the rise in gas prices [which after rising for 10 weeks are at their highest since Labor Day, according to AAA Southern New England] is having an effect on consumer confidence,” Scott Anderson, a senior economist at Wells Fargo & Co. in Minneapolis, told Bloomberg. “We expect to see modest weakening over the next 12 months or so in consumer spending.”

The Reuters/University of Michigan Surveys of Consumers is produced each month by the University of Michigan and distributed by Reuters. Additional information is available at www.sca.isr.umich.edu.

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