ANN ARBOR, Mich. – After dipping last month to the lowest level since Hurricane Katrina, the mood of U.S. consumer attitudes continued to deteriorate, according to the Reuters / University of Michigan preliminary index of consumer sentiment released today.
The December reading fell to 74.5 from the November level of 76.1 in November, as high fuel prices, tighter credit and flat real estate values continued to limit consumers’ ability to draw on home equity to finance spending.
The index was half a percentage point lower than the median forecast from a survey of 63 economists by Bloomberg News. Since its inception since 1978, the gauge of consumer sentiment has averaged 88.
“This month’s decline reflects the fallout from the ongoing housing-market correction, the turmoil in the subprime market, the volatility in the stock market and rising gasoline prices,” said Steven Wood, president of Insight Economics LLC in Danville, Calif.
In a separate report, the U.S. Bureau of Labor Statistics said the economy added 94,000 jobs last month, after adding 170,000 in October – proving that there is still resilience in the market even as the housing slump deepens. (READ MORE)
Still, aspects of the Reuters / University of Michigan Surveys of Consumers bolster the feeling among economists that the Federal Reserve is likely to pare interest rates again when its policymaking Federal Open Market Committee meets next week. The surveys’ Expectations Index, an indicator of future consumer spending, dropped to 63.2 – the lowest since October 2005 – from 66.2 in November, today’s report showed.
The Reuters/University of Michigan Surveys of Consumers report is produced each month by the University of Michigan and distributed by Reuters. Additional information is available at www.sca.isr.umich.edu.
