Confidence among U.S. consumers unexpectedly dropped in October as AmericansÃ¢â‚¬â„¢ outlooks for the economy and their finances slumped to the lowest level since 1980.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 57.5 this month from 59.4 in September. The median estimate of economists surveyed by Bloomberg News called for a reading of 60.2. The gauge of consumer expectations for six months from now, which more closely projects the direction of consumer spending, dropped to 47, the lowest since May 1980.
Consumers may be questioning the recoveryÃ¢â‚¬â„¢s durability as incomes stagnate, home prices fall and policy makers debate ways to strengthen the recovery. Faster job growth may hold the key to bigger gains in consumer spending that accounts for about 70 percent of the economy.
Ã¢â‚¬Å“Sentiment is consistent with a still-struggling U.S. economy, and if confidence were to hold at these levels, that would reflect bad news on the job market,Ã¢â‚¬Â said James Shugg, a senior economist at Westpac Banking Corp. in London. Ã¢â‚¬Å“There are still real concerns among consumers about the outlook.Ã¢â‚¬Â
Estimates of the 73 economists surveyed by Bloomberg for the confidence measure ranged from 57 to 64. The difference between the median projection and the actual figure was the biggest in percentage terms since November 2010. The index averaged 89 in the five years leading up to the recession that began in December 2007 and ended in June 2009.
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