SIGN UP

Consumer Confidence Decrease Comes as Surprise

Published on: 08/31/18 8:50 AM

Tags: , , , ,

Category: Latest News, US News, World News

Surprising data out of the University of Michigan.

Consumer confidence index shows a drop for the first time since last September, prompting financial experts to speculate on what caused the decrease.
Friday’s report demonstrated that consumer confidence fell to 95.3, its lowest level in nearly one year. This number missed the estimated prediction of 98. The figure also clocked in significantly lower than last month’s reading of 97.9. According to the survey’s curator, Richard Curtin, the dip can be blamed on the less favorable reports of buying conditions. These conditions have dropped to the lowest numbers in almost four years while consumers’ thoughts on durable costs dipped to levels not seen since 2008. In addition to durable costs, both automobile buying conditions and housing pricing also brought the index lower. Vehicle buying conditions fell to the least favorable index number since 1984 and home pricing was the worst since 2006. These data points indicate that many respondents view products as being priced at unfavorable levels.

Consumer Confidence Decrease Comes as Surprise


The news comes as a surprise in large part because last month’s report was so positive. With inflation now at the targeted rate of 2.0 percent, consumers appear to be jittery, believing that the number will approach 2.9 percent by the end of the year. More insight will be shed on expected interest rates for the rest of the year after the Federal Reserve releases data next Wednesday. In addition to the consumer confidence numbers, new data also indicates that the current economic conditions index also dropped 6.8 points to land at 107.8. This is a decrease of 5.8 percent.

The threat of ongoing trade wars could also be contributing to the lower than expected consumer confidence numbers. Consumers have legitimate fears of rising prices on goods as a result of tariffs on steel and aluminum imposed by the Chinese government in response to President Donald Trump’s strong rhetoric. Earlier this week the White House announced that a Chinese delegation led by Vice Minister of Commerce Wang Shouwen will travel to the United States next week to meet with American government officials in an effort to resolve the ongoing trade disputes.

Although the dip in consumer confidence came as a surprise, the value of the dollar was not immediately affected by the negative report. However, Friday’s subsequent release of the Canadian CPI report did move the dollar value to 95.8. Recent highs of this basket had clocked in at 96.6.