Consumer Sentiment Slips as Mortgage Rates Rise, Economy Slows

Consumer Sentiment
Nam Y. Huh/AP
By Luciana Lopez

NEW YORK -- U.S. consumer sentiment slid in September to its lowest in five months as consumers saw higher interest rates and sluggish economic growth ahead, a survey released Friday showed.

The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment slipped to 77.5 in September from 82.1 in August -- the lowest final reading since April.

The September figure was lower than the 78.0 economists had expected in a Reuters poll, but higher than a mid-month preliminary reading of 76.8.

Looming Congressional showdowns over a possible government shutdown and the need to raise the debt ceiling or else face the possibility of default have renewed worries about fiscal policy and legislative gridlock.

"While few consumers expected a federal shutdown, complaints about government policies have risen, and more importantly, prospects for job growth have diminished," survey director Richard Curtin said in a statement.

Other gauges also hit their lowest final reading since April: the gauge of consumer expectations, at 67.8, and the index of current conditions, at 92.6.

While the U.S. Federal Reserve decided this month not to pull back on its massive bond-buying program yet, analysts still see the Fed scaling back in coming months.

Those views, in turn, have helped push up long-term interest rates by more than a full percentage point since May, with 30-year mortgage rates recently hitting a year high of 4.80 percent.

Economists fear consumer sentiment could weaken further if higher interest rates start to slow momentum in a housing revival that has been one of the brightest spots in the overall U.S. recovery.

The one-year inflation expectation rose to 3.3 percent from 3.0 percent while the five-to-10-year inflation outlook edged up to 3.0 percent from 2.9 percent.


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betty_brock

Hello, this country is already broke.

September 29 2013 at 10:03 PM Report abuse rate up rate down Reply