The Thomson Reuters/University of Michigan Surveys of Consumers released its August report and the consumer will not be pulling the economy out of its current damaged state.
The Sentiment Index was 68.9 in the August 2010 survey, slightly above the 67.8 in July and last year’s 65.7.
The release came just hours after the Department of Commerce revised second quarter GDP improvement to 1.6% from 2.4%, primarily because of strength in imports and changes in inventory figures. Taken together and added to housing data from earlier this week, the numbers combine to show an American economy that has fallen back into recession.
The overall level of confidence remained largely unchanged in August as consumers did not panic in the face of slowing economic growth and the media’s double-dip drumbeat. The bad news is that consumers expect lackluster income and job growth for an extended period of time. This “new normal” outlook has encouraged consumers to pare down their debts and increase their reserve funds.
Douglas A. McIntyre
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