NEW YORK (Reuters) - Consumer sentiment tumbled to its lowest in over a year in early March as more Americans were dissatisfied with government economic policies and fewer expected to see improvements in growth or the labor market, a survey released on Friday showed.
The Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment dropped to 71.8 from 77.6 in February, confounding expectations for a slightly higher reading of 78. It was the lowest level since December 2011.
Across-the-board government spending cuts of $85 billion went into effect at the beginning of the month after U.S. lawmakers failed to come to a deal on government finances.
A record 34 percent of respondents made unfavorable references to government economic policies, beating January’s prior record of 31 percent.
“The frustrations expressed by consumers essentially involve how little consideration has been given to how the government’s inability to reach a compromise affects people’s economic situation,” survey director Richard Curtin said in a statement.
The barometer of current economic conditions fell to 87.5 from 89, while the gauge of consumer expectations tumbled to 61.7 from 70.2, its weakest since November 2011.
Thirty percent of consumers expected the pace of economic growth would worsen in the coming year, up from 22 percent the previous month, while 38 percent expected the unemployment rate to increase, up from 27 percent.
Consumers were also more pessimistic about the outlook for their own finances, with just 20 percent expecting their situation to improve this year, a record low for the survey.
Still, the damage to buying plans has so far been minimal, the survey found. The index of buying conditions for durable goods eased just slightly to 139 from 140. Financial markets saw little reaction to the data.
The one-year inflation expectation held steady at 3.3 percent and the five-to-10-year inflation outlook edged down to 2.9 percent from 3 percent.
Reporting by Leah Schnurr; Editing by Chizu Nomiyama and James Dalgleish