– Consumer sentiment in the US fell surprisingly sharply
Due to persistent inflation concerns, consumer sentiment fell to 106.1 points in August from 114.0 points in July.
US consumption sentiment took a sudden turn for the worse in August due to persistent concerns about inflation. A measure of consumer confidence fell to 106.1 points from a revised 114.0 points in July, the institute’s conference board announced in its survey Tuesday. Economists polled by Reuters had expected the index to reach 116.0 points. “Consumers are once again facing higher prices in general, and food and gasoline prices in particular,” said Dana Peterson, chief economist at The Conference Board.
Consumers assessed the situation and prospects more negatively. The expectations scale decreased from 88.0 to 80.2 points. Thus, it is slightly above the 80 level, which is considered a sign of recession in the coming year. “Consumers may hear more bad news about corporate earnings as job vacancies shrink and interest rates continue to rise, making large purchases more expensive,” Peterson said.
The sharp rise in consumer prices continues to reduce the purchasing power of consumers. However, inflation is generally declining, although July’s inflation rate was 3.2%, slightly higher than June’s figure of 3.0%. However, the US Federal Reserve aims to reach a value of 2.0%. It pushed the key interest rate to 5.25-5.50% with a series of hikes. It is unclear whether a peak in interest rates has been reached. According to Federal Reserve Chairman Jerome Powell, it may be necessary to raise interest rates again. Meanwhile, he signaled a dovish approach at a central bank forum in Jackson Hole. Therefore, the monetary authorities will carefully weigh the pros and cons of further tightening. Despite a series of interest rate hikes, inflation remains very high.