US consumer sentiment falls as world's outlook brightens
US consumer sentiment fell unexpectedly in October, according to a new report.
Australians are cheery. Europeans are on the mend. The Japanese? Recovering.
Americans, however, are sliding back into pessimism, according to the Reuters/University of Michigan Surveys of Consumers. Consumer sentiment fell unexpectedly from 73.5 in September to 69.4 in October. That retraced a bit of the index's run-up since late last year.
Of more concern is the surveys' economic outlook index, which fell from 73.5 in September to 67.6 this month. "It has the closest relationship with spending," warned Paul Dales, an economist with Capital Economics, in a written analysis. It suggests that instead of spending increasing at a 3.5 percent annual clip during the third quarter, it might only rise 1 percent, he added.
This slow-growth pessimism is increasingly at odds with what is happening in other parts of the world. In Australia, the Westpac-Melbourne Institute reported Wednesday that its index of consumer sentiment rose 1.7 percent in October, just barely below its 2007 peak.
In Japan, consumer confidence in September rose for the ninth month in a row, according to a Japanese government survey also released on Wednesday. The last reading from the European Union, in late September, showed a rise for the sixth month in a row (albeit at a slower pace than earlier in the year).
So what's eating Americans, who are normally an optimistic bunch? Job losses and large debts play a role.
"The survey indicates that consumers have become more confident about the overall economy, but they are still very worried about their own financial conditions," wrote Nigel Gault, chief US economist at IHS Global Insight, in his analysis. He forecasts consumer spending next year will rise 1.5 percent next year, better than this year's projected 0.7 percent decline.
But it's still a weak and gloomy outlook for an economy that needs robust consumer spending to begin firing on all cylinders.
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