U.S. consumer sentiment unexpectedly slumped in early October as worries about declining incomes drove consumer expectations back down to the lowest level in more than 30 years, a survey released Friday showed.
 |
Consumers' outlook also deteriorated with the gauge of consumer expectations falling to its lowest level since May 1980 at 47.0 from 49.4. The index had fallen to this level in early September before being revised up at the end of the month.
The component has shed more than 20 points since the beginning of the year.
"Overall, the data indicate that a recessionary downturn is likely to occur," survey director Richard Curtin said in a statement.
"Even if the economy manages to avoid the formal recession designation by (The National Bureau of Economic Research), real consumer expenditures will not be strong enough to enable the more robust job growth that is needed to offset the negative grip of economic stagnation on consumer behavior."
Thirty-nine percent of consumers cited income declines as the reason why their finances have recently worsened, while 65 percent of all households expected no income increase during the year ahead. Both levels were the highest ever recorded by the survey.
The survey's barometer of current economic conditions dipped to 73.8 from 74.9.
Improvement in inflation expectations was a silver lining, with the one-year inflation expectation easing to 3.2 percent from 3.3 percent. The survey's five-to-10-year inflation outlook fell to 2.7 percent from 2.9 percent.
Correction: An earlier headline on this story mischaracterized the drop in consumer sentiment.
A Libyan revolutionary fighter patrols in downtown Sirte, Libya, on Friday. A gun battle was reported in the capital, Tripoli. Manu Brabo/Associated Press
Comment
Photos
