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US consumer confidence stalls as borrowing worries deepen

American households ended October with consumer sentiment almost unchanged, but their assessment of current conditions deteriorated as expectations improved. The University of Michigan survey put the final index at 48. High borrowing costs weighed on major purchases, with 85 per cent of respondents calling it a bad time to buy a home.

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Current conditions weaken as expectations recover

US consumer sentiment ended October at 48 in the University of Michigan’s final household survey, almost unchanged from September’s 48.1. The assessment of current economic conditions weakened while expectations improved. The university released the final results on 23 October.[1], [2]

The current-conditions index fell from 50.9 to 46.7, while expectations increased from 46.3 to 48.8. Both measures remained below their levels a year earlier. Survey director Joanne Hsu attributed the deterioration in current conditions to an 18 per cent decline in buying conditions for durable goods, with respondents citing high rates and affordability concerns.[1]

High rates weigh on homebuying assessments

Some 85 per cent considered it a bad time to buy a home. The proportion citing high interest rates rose from 47 per cent in September to 62 per cent. By contrast, the share mentioning home prices declined from 47 per cent two months earlier to 42 per cent. Interest-rate concerns about vehicle purchases also increased, from 18 per cent to 24 per cent.[1]

Price worries deepen among households with fewer assets

Unprompted mentions of high prices damaging personal finances rose for a fourth month to 56 per cent, compared with 45 per cent in January. Consumers with little or no stock wealth expressed growing concern, whereas those with the largest portfolios reported little change in the burden since February. Interviews run online throughout the month; the survey measures household assessments rather than realised spending.[1]

References

  1. News sourceUniversity of MichiganUS consumer sentiment ends October at 48↩1↩2↩3↩4
  2. News sourceABA Banking JournalFinal October consumer sentiment edges down↩
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