© Reuters. FILE PHOTO: People shop at a Target store in Chicago, Illinois, U.S., November 25, 2022. REUTERS/Jim Vondruska

(Reuters) – U.S. consumer sentiment fell for the first time in four months in March as consumers worried increasingly that a recession is coming, although the turmoil in the banking system has yet to resonate extensively among American households, a survey released on Friday showed.

The University of Michigan’s monthly Consumer Sentiment Index slid to 62.0 in March from 67.0 in February and a mid-month reading of 63.4. It also lagged the median forecast among economists polled by Reuters for a reading of 63.2.

“Consumer sentiment fell for the first time in four months, dropping about 8% below February but remaining 4% above a year ago,” Joanne Hsu, the director of the University of Michigan’s Surveys of Consumers, said in a statement. “This month’s turmoil in the banking sector had limited impact on consumer sentiment, which was already exhibiting downward momentum prior to the collapse of Silicon Valley Bank.”

The failure of SVB earlier this month and of Signature Bank (OTC:) two days later forced officials at the Federal Reserve and other finance sector overseers to take emergency action to shore up the banking system to head off a wider run on deposits.

See also  Business News LIVE Today: Latest Business News, Share Market News, Economy & Finance News

Officials have said deposit flows have stabilized, and the University of Michigan’s findings support a view some policymakers have voiced that the episode, while jarring, may prove to have a limited effect on household consumption.

Still, consumers had more pessimistic assessments of both their current situation and the future than they did a month ago, the survey showed.

“Overall, our data revealed multiple signs that consumers increasingly expect a recession ahead,” Hsu said.

The survey also showed consumers’ views of inflation over the near-term moderated further over the course of the month. One-year inflation expectations fell to 3.6% from 4.1% in February and 3.8% two weeks earlier. That was the lowest reading since April 2021 and will be a welcome development for Fed officials who had worried last year that inflation expectations might become unanchored.

Expectations for inflation over a five-year horizon were unchanged from a month earlier at 2.9%.


Source link

(This article is generated through the syndicated feed sources, Financetin doesn’t own any part of this article)

Leave a Reply

Your email address will not be published. Required fields are marked *