Consumer sentiment, which covers how consumers view their personal finances as well as business and buying conditions, tumbled in August to the lowest level since May 1980, as a volatile stock market, weak employment and worries about federal debt took their toll, reports MarketWatch.
According to a preliminary University of Michigan/Thomson Reuters index released Friday, consumer sentiment dropped to 54.9 from 63.7 in July.However, the extremely low sentiment levels may not persist, said Paul Dales, senior U.S. economist at Capital Economics. "With equity prices having rebound[ed] by 5 percent since the end of the survey period, confidence is very unlikely to stay this low for long," Dales wrote in a research note. "As such, we still hope that GDP growth will bounce back a bit in the third quarter and that a recession will be avoided."
A separate consumer confidence survey from Rasmussen was just above the lowest level of two years. Rasmussen's latest investor confidence survey fell to a two-year low, with only 4 percent of investors saying the economy is good or excellent, and two-thirds saying it's poor. Just 37 percent have confidence in the stability of the U.S. banking system - the lowest on record, Rasmussen said.
