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Unexpected Drop for Consumer Sentiment
Consumer Sentiment Aased in early January, according to a survey released Friday, as shoppers’ holiday shopping bills came due for payment.
The University of Michigan’s preliminary reading of its consumer confidence index for January was 95.8, down from December’s final reading of 97.1, according to market sources who saw the subscription-only report. Analysts on average had forecast that the index would rise to 98.0.
The survey’s index of current conditions came in at 110.4, up from December’s 106.7, and its index of consumer expectations gave a preliminary January reading of 86.4, down from the December reading of 90.9.
”Most of the anecdotal reports said it was a pretty good Christmas season and I think people may have run up quite a bit of bills,” said Chris Rupkey, chief economist at Bank of Tokyo-Mitsubishi in New York. ”It’s come time for the consumer to pay the piper when it comes to their holiday purchases.”
”They shopped and now they drop,” he said, adding personal savings rates are low and people may be feeling overextended.
Consumer confidence is considered a barometer of consumer spending, which accounts for two-thirds of the economy. However, the correlation between confidence and retail sales has not been strong in recent years.
Treasury debt prices were slightly lower in price after the data, with the benchmark 10-year note off 1/32 in price with a yield of 4.18 percent.
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