Consumer confidence which all along was steady irrespective of the long drawn trade war has begun to wane laying the American economy open to high risk.
The fall was indicated by the September index for consumer sentiment generated by The Conference Board which dropped to 125.1. This was lesser than the 133.5 expectation of economists’ consensus drawn from a Reuter survey. The fall was the largest in preceding nine months.
Lynn Franco, senior director of economic indicators at The Conference Board stated that the continued trade and tariff war tensions between U.S. and China seemed to have shaken consumers. Additionally, the recent bearish trend in equity market could be another cause of concern for the economy, stated James Knightley, ING’s chief international economist. The gasoline price hike a few days ago amidst the oil market upheaval was one more contributory factor, he added.
Franco added that consumer confidence seemed to be weakening with the continuance of the volatile and uncertain conditions. Their perspective on the short-term outlook had also dropped. The August confidence index had been cut down from 135.1 to 134.2.
With consumers making up for a large percentage of the American economy, their waning confidence is bound to falter the growth engine of the American economy. The consumers’ evaluation of the present market and business scenario had led to a drop in the Present Situation Index to 169.0 from 176.0.
With consumers viewing the job market as less conducive, The Conference Board’s action plan for the current scenario and its forecasts also lowered. This was not the first among the consumer sentiment measures to have been impacted by the trade dispute.
A survey undertaken by the University of Michigan in August on consumer sentiment had also indicated a huge fall since December 2012 in view of the continued trade uncertainties.