By Mark Huffman
ConsumerAffairs.com
May 30, 2008
Evidence continues to accumulate that U.S. consumers are not a happy bunch these days. The latest Reuters/University of Michigan consumer sentiment index fell to 59.8 in May, the lowest level in 28 years.
Earlier this week the Conference Board released its Consumer Confidence Index, showing consumer sentiment at the lowest point in 16 years.
Economists who put together the University of Michigan survey singled out rising gasoline prices and concerns about the job market as the prime reasons for the sour outlook. They say declining confidence is likely to translate into slower consumer spending.
In an unrelated report today, the U.S. Commerce Department said consumer spending was actually up slightly in April, but at a slower pace than March. Economists are hopeful that the federal tax rebates, that have begun to hit consumers' mailboxes this month, will help keep consumers shopping throughout the coming months.
Looking ahead, consumers don't appear all that hopeful. The University of Michigan index of consumer expectations for six months from now dropped to 51.1, the lowest level in 18 years.
Consumers told the survey takers they expect prices to keep rising, with a consensus expectation of a 5.2 percent inflation rate over the next 12 months.
American consumers are not alone in their gloomy outlook. British consumer confidence has dropped it its lowest point since 1990, according to the latest Gfk NOP survey. And in Canada, consumer confidence has hit its lowest level since September 2001. The survey by Harris-Decima showed the number of people who think it's a bad time to make a major purchase has almost doubled since the fall of 2007.
