Consumer sentiment dims in December

ANN ARBOR, Mich. – Consumers this month are less optimistic about the economy than at any point in the past two years, the Reuters/University of Michigan Surveys of Consumers said in its final report for December, according to Bloomberg News.
The Reuters/University of Michigan Consumer Sentiment Index fell to 75.5 points this month from its November level of 76.1. But analysts had expected an even sharper decline to 74.5 points, based on the median estimate from a Bloomberg survey of 57 economists. (Their estimates ranged from 70 points to 77.5.)
Falling home values, high fuel prices and a tumultuous stock market all were cited as contributing to consumers’ anxiety about their finances.
The survey’s index of current conditions declined for a fifth consecutive month, to 91 points from November’s 91.5. The expectations index – designed as an indicator of future consumer spending – fell to 65.6 points this month from November’s 66.2.
The inflation rate consumers expect a year from now was unchanged, however, at 3.4 percent.
“All eyes are on the consumer as we come down to the wire for the important holiday-season spending,” Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, told Bloomberg News. “Consumers’ spirits are down in the dumps, and the million-dollar question is whether their caution will result in declining sales at the shops and malls this season.”
So far, the answer appears to be no, based on a report released today by the U.S. Bureau of Economic Analysis, which found consumer spending nationwide rose 1.1 percent last month as the holiday shopping season began. (READ MORE)
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.