(Bloomberg) -- U.S. consumer sentiment fell in early August to the lowest level in nearly a decade as Americans grew more concerned about the economy’s prospects, inflation and the recent surge in coronavirus cases.
The University of Michigan’s preliminary sentiment index fell by 11 points to 70.2, the lowest since December 2011, data released Friday showed. The figure fell well short of all estimates in a Bloomberg survey of economists.
The slump in confidence risks a more pronounced slowing in economic growth in coming months should consumers rein in spending. The recent deterioration in sentiment highlights how rising prices and concerns about the delta variant’s potential impact on the economy are weighing on Americans.
“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,” Richard Curtin, director of the survey, said in the report.
The expectations gauge plummeted almost 14 points to 65.2, the lowest since October 2013. A measure of consumers’ outlook for the economy over the coming year soured, falling the most since the onset of the pandemic in March 2020.
Consumers also became decidedly downbeat about their income prospects. The gauge of expected personal finances fell to a seven-year low.
An index of current conditions dropped to 77.9, the lowest since April of last year, according to the survey conducted July 28 to August 11.
Consumers expect inflation to rise 3% over the next five to ten years, an increase from the 2.8% seen last month and matching the highest level since 2013. They expect prices to advance 4.6% over the next year, a slight pullback from the 4.7% seen in the July survey.
Concerns about the variant have accelerated in recent weeks. A number of U.S. cities have reintroduced mask requirements, and events such as the upcoming New York International Auto Show have been cancelled. Meantime, several companies including Alphabet (NASDAQ: GOOGL ) Inc.’s Google, Amazon.com Inc (NASDAQ: AMZN ). and BlackRock Inc (NYSE: BLK ). have all recently pushed back plans to return to the office.
The Michigan report showed buying conditions deteriorated to the lowest since April of last year.
©2021 Bloomberg L.P.
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