Consumer confidence in the U.S. registered the largest monthly fall since December 2012 in August as the level of consumer sentiment was revised down from an initial estimate amid "negative references" to tariffs, according to the latest survey data from the University of Michigan.
The index of consumer sentiment fell to a reading of 89.8 in August, falling short of an earlier estimate of 92.1 and July's reading of 98.4. The consensus estimate of economists polled by Econoday was for an index reading of 92.3 in August.
One in three consumers spontaneously cited the negative impact of tariffs, which are already leading to a deterioration in consumer confidence, according to the Surveys of Consumers Chief Economist Richard Curtin.
Comparing the recent drop in consumer sentiment with that in 2012, Curtin noted that consumers' concerns owing to declining government expenditure and rising taxes in 2012 were "promptly resolved" but U.S. President Donald Trump's tariff policies have been repeatedly reversed despite threats of increased tariffs.
"Unlike the repeated tariff reversals, negative trends in consumer sentiment cannot be easily reversed," Curtin said, noting that tariff reversals raise uncertainty and reduce consumer spending.
In addition, these consumers flagged concerns regarding increased inflation expectations for the year-ahead period, higher frequency of anticipated increasing unemployment and anticipated smaller annual increase in household incomes.
The index of consumer expectations fell to 79.9 from 90.5 in July, while the current economic conditions index dropped to 105.3 from 110.7.
The next release, containing preliminary data for September, is due to be published Sept. 13.
Recent survey data from the Conference Board also showed a monthly decline in U.S. consumer confidence in August, flagging risks to consumers' optimism regarding the short-term economic outlook if the recent escalation in trade and tariff tensions persists.
