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U.S. consumer confidence collapses in early August at decade low
US consumer confidence fell sharply in early August at its lowest level in a decade, in a worrying sign for the economy as Americans gave faltering perspectives on everything from Personal finance To inflation and use, a survey showed.
Unexpected reading might give Federal Reserve Policy Makers pause if this translates in the coming months into a breach in economic activity. The central bank is getting closer to a decision on when to start withdrawing the extraordinary stimulus it was put in place to protect the economy from the covid-19 pandemic.
The University of Michigan said its Preliminary consumer sentiment index fell to 70.2 in the first half of this month from a final reading of 81.2 in July. This was the lowest level since 2011, and there has been only two larger drops in the index in the last 50 years. This was at the height of the 2007-2009 recession and during the first wave of closures in April 2020 at the start of the pandemic.
The losses were generalized through Income, age, and education subgroups and covered all regions. Economists interviewed by Reuters had expected the index to remain unchanged at 81.2.
American Stock Indices slipped immediately after the report was released, as the price of gold gained ground. Yields on US Treasury bonds hit their lowest point.
“The new plunge suggests that the latest wave of virus cases caused by the Delta variant could be a bigger drag on the economy than we thought,” said Andrew Hunter, economist at Capital Economics.
Economic growth is expected to grow again this year at its fastest rate in four decades after falling into a brief recession in 2020 caused by the coronavirus pandemic. But the recovery shows cooling indication.
Covid-19 cases have doubled in past two weeks reach a peak of six months when the most transmissible Delta variant is spreading rapidly across the country. Labor shortages across the service sector also persist while supply chain disruptions continued.