Consumer sentiment in the U.S. has seen a substantial deterioration in early September, according to the University of Michigan's preliminary report on consumer sentiment during the month.
The report said the consumer sentiment index tumbled to 85.7 in September from the final August reading of 91.9. Economists had expected the index to show a much more modest decrease to 91.0.
The much steeper than expected drop by the index likely reflects concerns about the substantial volatility seen on Wall Street in recent weeks.
Richard Curtin, the survey's chief economist, said, "While the current strength in consumer spending is still likely to persist in the year ahead, the more lasting impact of recent events may be a heightened attentiveness by consumers to potential negative developments."
"Without this recent shift in focus, consumers would have been more likely to view the Fed's interest rate hike as confirming their prevailing optimism, but with the shift, it could be taken as a signal for a slower pace of future economic growth," he added.
The steep drop by the consumer sentiment index reflects notable decreases in both the assessment of current conditions and consumer expectations.
The current economic conditions index dropped to 100.3 in September from 105.1 in August, while the index of consumer expectations plummeted to 76.4 from 83.4.
On the inflation front, the report said five-to-ten-year inflation expectations inched up a tenth of a percentage point to 2.8 percent.
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