NEW YORK Oct 14 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 on Friday
The Thomson Reuters/University of Michigan's preliminary
reading on the overall index on consumer sentiment sagged to
57.5 from 59.4 the month before. It fell short of the median
forecast of 60.2 among economists polled by Reuters.
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
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
"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'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.