US: Consumers remain downbeat about current conditions – Wells Fargo

After plunging to its lowest level since 2011 in August, consumer sentiment improved only modestly in early September to 71.0 from 70.3 previously, explained analysts at Wells Fargo. According to them, consumers remain downbeat about current conditions. 

Key Quotes: 

“Consumer sentiment measured by the University of Michigan suggests consumers are more downbeat today than when the pandemic first struck last year. The preliminary read on consumer sentiment for September showed only a modest improvement to 71.0 in early September, which is still lower than at any point during the pandemic and a worrying indication for the outlook for the consumer.”

“Despite worries over higher prices, consumers overall views of household finances improved in September, which is particularly encouraging given the expiration of enhanced unemployment benefits at the start of the month and dwindling fiscal support more broadly.”

“Today’s report is clear: consumers remain more downbeat that just a few months ago, which is consistent with weaker spending. Retail sales came in higher than expected in August, but that data largely covers the goods sector and is in nominal dollars, or not adjusted for changes in prices. We believe households remain in solid financial shape given the accumulated savings over the past year and increase in net worth across income cohorts, but the rapid rise in consumer prices and the surge in case counts associated with the virus are likely weighing on near-term spending.”