“A sharp fall in consumer sentiment is a surprise and may reflect recent equity market volatility and a spike in gasoline prices,” note ING economists. “A strong jobs market and rising pay will underpin sentiment and spending to a certain extent, but we shouldn’t take it for granted. Today’s figures support the case for further precautionary Fed policy easing.”
Key quotes
“There are still reasons to be positive on the US consumer spending outlook. Unemployment is at multi-decade lows while today’s Conference Board report showed more than 40% of respondents feel that there are plenty of jobs available. This gives a sense that there are opportunities for career progression or higher pay both inside and outside of your current employer.”
“With the US manufacturing sector seemingly in recession (note another large fall in the Richmond Fed index this morning) and weaker global growth and trade headwinds unlikely to dissipate anytime soon, the Fed will be understanding that the real source of strength in the US economy – the consumer – needs protecting.”
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