Consumer sentiment plunged in the first part of August to the lowest level in almost a decade, even lower than at the onset of the pandemic, amid concerns over the economic impact of the rising virus cases, a new survey shows.
The gloom was widespread, spanning every income, age, and education level across all regions and covering every aspect of the economy, from personal finances to inflation to unemployment, Richard Curtin, director of the University of Michigan consumer sentiment survey, said in a statement.
As the chart below shows, the preliminary August sentiment index dropped 13.5% from July to 70.2, the lowest level since December 2011. That edged out the recent low seen in April 2020, during the pandemic's onset, and missed economists’ expectations of 81.2, according to Moody’s Analytics.
“Consumers have correctly reasoned that the economy's performance will be diminished over the next several months, but the extraordinary surge in negative economic assessments also reflects an emotional response, mainly from dashed hopes that the pandemic would soon end,” Curtin wrote.
While Curtin said he expected consumers to regain optimism in the months ahead, Ryan Sweet, an economist at Moody’s, wrote in a commentary that “gloomy consumers add to the downside risk to consumer spending this quarter.”
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