Consumer confidence eases in August, reflecting economic cross-currents

Sep 02, 2013

Consumer confidence eased in August after reaching its highest level in six years in the prior month, according to University of Michigan economist Richard Curtin, director of the Thomson Reuters/U-M Surveys of Consumers.

Conducted by the U-M Institute for Social Research since 1946, the surveys monitor and expectations.

"The August survey indicates that the recent confidence gains have stalled as await decisions on the and ," Curtin said. "Unlike a year ago, consumers do not anticipate that the budgetary issues will engender a similar Congressional stalemate, but few express a great deal of confidence in the of the government.

"A renewed congressional storm as well as rising market interest rates could trim the anticipated gains in and weaken the pace of overall economic growth. Without this unneeded harm, will regain its footing and act to expand spending in the year ahead."

The small retrenchment still meant that the Sentiment Index was significantly higher than a year ago and still points toward increases in consumer spending during the year ahead, according to Curtin. The cross-currents responsible for the small August decline are inevitable in a slow growth economy.

Consumers were more optimistic about income increases during the year ahead than any other time in nearly five years, although they have become less certain about whether the economy would be strong enough to appreciably lower the in the year ahead, he said. Perhaps the largest August change was that nearly two-thirds now expect interest rate increases during the year ahead.

Personal finances improve

While complaints about current incomes increased in August, consumers anticipated the largest income increases since November 2008. Unfortunately, the median expected increase was just 0.9 percent, smaller than the inflation rate anticipated for the year ahead.

While consumers still anticipate an expanding economy, the majority are not ready to expect the re-establishment of "good" economic times, Curtin said. This is largely due to concerns about unemployment.

This video is not supported by your browser at this time.

Favorable buying plans

Buying plans for durables and vehicles declined slightly in August largely due to less favorable views of market prices. Unfavorable views of vehicle-buying conditions rose to 31 percent in August from 25 percent in July, although more than half of all consumers still mentioned attractively low prices or interest rates on vehicle purchases. While home-buying attitudes declined, home-selling conditions improved: prices were judged less favorably for buying (the worst since 2007) and more favorably for selling (the best since 2006).

Consumer Sentiment Index

The Sentiment Index was 82.1 in the August 2013 survey, down from 85.1 in July but above last August's 74.3. The Expectations Index fell to 73.7 in August, down from 76.5 in July, remaining well above last August's 65.1. The Current Conditions Index was 95.2 in August, down from 98.6 in July, but well above last August's 88.7.

Explore further: Study shows banks that have good working relationships with their customers reduce loan defaults

More information: Link to related Excel chart
Link to related Excel table
Surveys of Consumers

add to favorites email to friend print save as pdf

Related Stories

Consumer confidence posts a significant gain in September

Oct 01, 2012

Consumer confidence improved substantially in September due to more favorable prospects for the national economy, according to University of Michigan economist Richard Curtin, director of the Thomson Reuters/University ...

Consumer confidence improves slightly in August

Sep 03, 2012

(—Consumer confidence improved slightly in August due to consumers' more favorable evaluations of their present financial situations, according to University of Michigan economist Richard Curtin, ...

Consumer confidence withstands Boston bombing

Apr 29, 2013

The overall level of consumer confidence declined in April from March, but was identical to last April's reading, according to University of Michigan economist Richard Curtin, director of the Thomson Reuters/University ...

Consumer confidence plunges in December

Dec 24, 2012

(—Confidence plunged in December as consumers confronted the rising likelihood that political gridlock would push the country over the fiscal cliff.

Consumer confidence continues to improve in March

Apr 01, 2013

Consumer confidence continued to improve in March due to more positive signs of expanding employment, according to University of Michigan economist Richard Curtin, director of the Thomson Reuters/University ...

Recommended for you

Are the world's religions ready for ET?

14 hours ago

In 1930, Albert Einstein was asked for his opinion about the possibility of life elsewhere in the universe. "Other beings, perhaps, but not men," he answered. Then he was asked whether science and religion ...

How dinosaur arms turned into bird wings

15 hours ago

Although we now appreciate that birds evolved from a branch of the dinosaur family tree, a crucial adaptation for flight has continued to puzzle evolutionary biologists. During the millions of years that elapsed, wrists went ...

Mathematical model tackles 'Game of Thrones' predictions

16 hours ago

Take events from the past, build a statistical model, and tell the future. Why not apply the formula to novels? Can contents in future books be predicted based only on data from existing ones? Richard Vale ...

User comments : 0