University of Michigan /The Thomson Reuters overall index of consumer sentiment reflected households’ anxiety over their finances. It fell to 72.5 in early February, from 75.0 in January. It was the first drop in six months.
The fade in morale comes in the face of the recent run of comparatively strong data, including solid job growth and manufacturing activity.
Lindsey Piegza, an economist at FTN Financial in New York , said “While there is plenty of positive momentum in the economy there is still plenty to worry about.”
A Survey by the Conference Board on consumer attitudes also showed a fall in sentiment.
Households continue to struggle under the weight of huge debt loads and a sustained decline in house price also is not helping.
While consumers worried about incomes, they reported a record level of optimism about job prospects.
“This pattern of responses – less favorable current assessments and more favorable prospects – is not surprising. It simply indicates that consumers find their current situation all the harder to bear when improvement is finally in sight,” said sentiment survey director Richard Curtin.
Employers added 243,000 workers to their payrolls in January and the jobless rate fell to a three-year low of 8.3 percent.
Some economists were not too worried about the slide in sentiment early this month.
“The Michigan index is not seasonally adjusted and tends to be weak in February so the decrease in sentiment reported this year may partially be a reflection of this seasonal pattern,” said Daniel Silver, an economist at JPMorgan in New York.
Joe Smith, head of research at Alpari Forex, noted there was a “massive discrepancy” between consumer sentiment and buying patterns.
“We are seeing better-than-expected retail sales on a weekly basis,” he said. “If we get three consecutive months of 200,000-plus new jobs, then sentiment may catch up.”