This isn't shocking, but disappointing nonetheless. U.S. consumer confidence is at its lowest since the recession in 1980, piling on top of mounting terrible economic news in the past week which included the exit of individuals from the labor force, a downgrade of the U.S. economy and a volatile stock market.
The preliminary August reading on the consumer sentiment index fell to 54.9 in early August, down from 63.7 in July, and has fallen for three straight months. The August reading was well below the median forecast of 63.0 among economists polled by Reuters.
High unemployment, stagnant wages and the protracted debate in Congress over raising the U.S. government debt ceiling spooked consumers in the University of Michigan survey even before the downgrade of U.S. sovereign debt by Standard & Poor's. The consumer sentiment index registered most of the decline before the credit rating downgrade on August 5.
"Never before in the history of the surveys have so many consumers spontaneously mentioned negative aspects of the government's role," survey director Richard Curtin said in a statement.