Consumer confidence plunged this month as reported by the University of Michigan. With the prospect of an attack on Syria, low wage growth and the looming budget battle, confidence waned and the resulting retails sales drop was more evidence that the consumers are acting on their concerns.
For the past couple of months, there have been warnings by many of the retailers that sales are slowing. WalMart (WMT), Macy’s (M) and several other names have been very vocal about the outlook looking grim.
Consumer confidence in the U.S. declined in September to the lowest level since April, indicating household spending may take time to pick up. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment this month fell to 76.8 from August’s 82.1. Economists in a Bloomberg survey called for 82, according to the median projection.
Payrolls had the smallest back-to-back gains in a year and mortgage interest rates are hovering close to a two-year high, weighing on confidence. The restrained pace of hiring makes it harder to spur consumers’ purchases, which account for about 70 percent of the economy.
“Consumers have things to worry about,” Scott Brown, chief economist for Raymond James & Associates Inc. in St. Petersburg, Florida, said before the report. “Confidence will improve gradually.”