U.S. consumer sentiment fell more sharply in early October than analysts had expected, according to a survey released Friday.
The University of Michigan’s preliminary reading of its consumer confidence index for October was 87.5, down from September’s final reading of 94.2, according to market sources who saw the subscription-only report, and well below the median market expectation of a dip to 94.0.
The index’s two components also fell. The consumer expectations gauge dropped to 79.6 in early October from September final’s 88.0, and the current conditions component slipped to 99.6 from the final September reading of 103.7.
“You get a sense that consumer optimism is not what it was at the beginning of the year. My guess is you should attribute some of (the) decline to stepped up conflicts, geopolitical events and the unsettled global view, as much as the bread and butter issues that usually affect these surveys,” said Bob Gay, global strategist at Commerzbank Securities in New York.
Consumer confidence is considered a barometer in consumer spending, which accounts for two-thirds of the U.S. economy, although the correlation between confidence and retail sales has not been strong in recent years.
Earlier Friday, the Commerce Department said U.S. retail sales rose by a surprisingly big 1.5 percent in September, more than twice the increase that Wall Street had expected.