Turns out consumer sentiment did not fall quite as much in August as numbers released today revealed an upward revision to the preliminary data.
The Reuters/University of Michigan consumer sentiment survey increased from the initial reading of 63.2 to 65.7 in the final August reading. Still, that was down slightly from July’s final number of 66.0 and the lowest in four months.
Worries next year
Issues that may impact the economy next year gave the director of the survey reason for concern.
“The problem looming on the horizon is that after the inventory correction and the exhaustion of the stimulus, consumer demand will not be strong enough to maintain a robust pace of economic growth after mid 2010,” he said.
Though we saw an upward revision from early August, consumers reported “the worst assessments of their personal finances since the surveys began in 1946.”
Much can happen between now and next summer, and an improving economy seems likely to be come a self-perpetuating cycle, which would remove some of the doubts about the sustainability of any expansion past mid-2010.
However, consumers racked up plenty of debt this decade and are more focused on savings and repairing damaged balance sheets. And that may turn into a strong headwind and prevent a more robust recovery, which is typical following a steep recession.
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