Consumer sentiment declines in October

ANN ARBOR, Mich. – U.S. consumer sentiment fell in this month’s Reuters/University of Michigan Surveys of Consumers, defying analyst expectations, according to Bloomberg News.
The surveys’ preliminary index of consumer sentiment fell to 82.0 points in October – the lowest since August 2006 – from last month’s final reading of 83.4 points (2000 = 100 points). It had been expected to rise to 84.0 points, according to the median forecast of 63 economists surveyed by Bloomberg News.
By comparison, the index averaged 89.6 points in the first half of this year.
The expectations index, reflecting consumers’ view of the economy in the months ahead, fell to 71.6 points from last month’s 74.1. Yet the current conditions index, reflecting Americans’ perceptions of their own finances, rose to 98.2 points from September’s 97.9, while consumer expectations of inflation a year from now dipped to 3.0 percent from last month’s 3.1 percent.
“Consumers see increasing mortgage defaults, higher gas prices and, in some parts of the country, falling home prices,” Joseph Brusuelas, chief U.S. economist at IDEAglobal in New York, told Bloomberg News. “We won’t have a recession, but the economy will muddle through a period of sub-trend growth.”
The Reuters/University of Michigan Surveys of Consumers are produced each month by the University of Michigan and distributed by Reuters. Additional information is available at www.sca.isr.umich.edu.