ANN ARBOR, Mich. – Optimism among U.S. consumers fell to its lowest level in 26 years in preliminary April results released today by the Reuters / University of Michigan Surveys of Consumers.
The survey’s Consumer Sentiment Index plunged 8.4 percent to 63.2 points this month from 69.5 points in March. The new score was 26.2 percent below the 2007 average of 85.6. The lowest reading since the 62.0 points of March 1982, it indicated the nation is “diving deeper into recessionary territory on heightened worries over inflation and jobs,” Reuters said.
Analysts had expected the index to fall 0.7 percent to 69.0 points, based on the median prediction from a Bloomberg News survey of 64 economists.
Respondents’ expectations of future conditions also dimmed as their inflation fears rose. “The pocketbook issues are striking home,” Richard DeKaser, chief economist at National City Corp., told Bloomberg Television in an interview in Washington. “People seemed here to be more focused on things like the rising unemployment rate, persistently high gas prices.”
The survey’s Expectations Index – an indicator of future consumer spending, based on consumer hopes for the economy over the next half-year – fell 11.1 percent to 53.4 points, after falling 1.6 percent in March to 61.4. The April reading was the lowest since November 1990, Bloomberg said.
Inflation fears contributed to that pessimism: A year from now, respondents said, they expect inflation to be running at 4.8 percent per year, up from previous projections of 4.5 percent in March, 3.6 percent in February and 3.4 percent in January and December.
“The April loss was due to rising inflation and shrinking income gains,” the survey center said in a statement on Reuters, adding: “There have only been a dozen other surveys that have recorded a lower level of consumer sentiment in the more-than-50-year history of the survey.”
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.
