NEW YORK (Reuters) – Consumer sentiment inched up in early September but Americans remained gloomy about the future with their expectations falling to the lowest level since 1980, a survey released on Friday showed.
The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment edged up to 57.8 from 55.7 the month before, which had been the lowest level since November 2008. It topped the median forecast of 56.5 among economists polled by Reuters.
Consumer spending is a linchpin of the U.S. economy but confidence has been badly hit as unemployment remains high and wages stagnate. Acrimonious political debate over the United States' debt ceiling dampened sentiment over the summer. So did worries the U.S. economy could fall back into recession.
"The consumer is still very frustrated with virtually everything -- 9 percent unemployment, still very tepid jobs creation and heightened job destruction," said Lindsey Piegza, economist at FTN Financial in New York.
Investors are now turning their attention to next week's Federal Reserve meeting. The central bank is expected to unveil new measures to bolster growth, though analysts expect the Fed will only be able to take modest steps.
A new jobs-creation package from President Barack Obama is also facing opposition, suggesting it is unlikely to emerge from Congress in its current form. For details, see
"It is basically an impasse in Washington as the President came out and talked about a jobs program, but it seems like more Americans are skeptical about the program than they are optimistic," said Piegza.
The economy is struggling to regain momentum after barely growing in the first half of the year. Consumer spending drives about two-thirds of activity.
The University of Michigan's gauge of consumer expectations dipped to 47.0 from 47.4. It was the lowest level since May 1980. The economic outlook for the next 12 months fell to 38 from 40, the lowest since February 2009 when the world economy was gripped by the credit crisis.
Still, the survey's barometer of current economic conditions gained to 74.5 from 68.7, and better than a forecast of 68.0.
"It was certainly nice to see the current conditions index rise again, but all we did was retake some ground to where we were in July," said Tom Porcelli, senior U.S. economist at RBC Capital Markets in New York.
"I don't think this report is important for the Fed meeting next week but I do think the overall lack of consumer confidence will be very important."
There was muted reaction in financial markets immediately following the data with U.S. stocks little changed in a choppy session.
Two bellwether U.S. companies expressed confidence in the economy on Thursday.
United Parcel Service Inc said the company was on track for record results this year despite the economy's "bumpy ride". General Electric's chief executive said he sees "good, decent economic growth everywhere."
Friday's data showed consumer confidence in economic policies near historic lows. Three out of four consumers expected bad times for the economy in the year ahead. Only half of respondents said the same at the beginning of the year.
The survey's one-year inflation expectation rose to 3.7 percent from 3.5 percent, while the survey's five-to-10-year inflation outlook was at 3.0 percent from 2.9 percent.
Separate data showed a measure of future U.S. economic growth was little changed in the latest week, while the annualized growth rate fell to its lowest level in a year.
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index dipped a hair to 122.4 in the week ended September 9 from 122.5 the week before. That was originally reported as 123.0.
The index's annualized growth rate slumped to minus 7.1 percent from minus 6.6 percent to fall to its lowest level since mid-September 2010.
(Additional reporting by Emily Flitter in New York and Jason Lange in Washington; Editing by Andrew Hay)
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