2 Min Read
WASHINGTON/NEW YORK (Reuters) - U.S. consumer sentiment worsened sharply in early August, falling to the lowest level in more than three decades, after retail sales posted the biggest gain in four months in July.
High unemployment, stagnant wages, gridlock in Congress, and a stock market slump all contributed to a consumer mood that was as grim as when Jimmy Carter was President during the recession of 1980 and interest rates were more than 20 percent.
Despite the gloom U.S. consumers kept spending in recent weeks with retail sales up in July by the most in four months.
"People's spending doesn't always correspond with their mood," said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Connecticut. "I doubt things are as weak as the sentiment readings suggest, but no doubt people will be cautious in August."
After one of the most volatile weeks in memory, U.S. stocks ended higher on Friday as the encouraging retail sales data overshadowed the weak consumer sentiment data.
But "the tumultuous last 10 days or so hasn't given our core customer, the middle income family, any reason to be more confident," said J.C. Penney Co Inc Chief Executive Myron Ullman on an analysts conference call Friday morning after the chain store retailer forecast weaker-than-expected third-quarter earnings.