Consumer confidence drops amid concerns about global economy

Consumer confidence drops amid concerns about global economy
© Getty Images
Consumer confidence fell in September over concerns about weakening U.S. growth and persistent worries that the global economy is slowing. 
Sentiment dropped to 85.7 this month, the lowest level in a year and down from 91.9 in August, according to the University of Michigan’s preliminary index released Friday. 
The survey noted that consumers were starting to shake off the volatility that hit global stock markets in August after China made several policy decisions, including taking steps that led to a quick drop in the value of its currency, the yuan. 
Steady jobs growth and falling gas prices are helping bolster concerns about the health of the global economy.
“The decline in optimism narrowed in early September from late August as consumers grew somewhat more confident that the underlying strength in the domestic economy would ensure a continued expansion,” said Richard Curtin, chief economist for the Surveys of Consumers.
“The twin strengths of higher employment and lower prices softened the impact from the losses in household wealth,” Curtin said. 
Still, consumers are anticipating a weaker U.S. economy over global concerns, which is churning up less optimistic sentiment about future jobs and wages growth and putting consumers on alert for any negative influences that may weigh on their finances. 
“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,” Curtin said. 
The index of consumer expectations six months down the road fell to 76.4 this month, from 83.4. 
Sentiment about current economic conditions, an assessment of household finances, dropped to 100.3, from 105.1. 
A separate poll Thursday found similar results, with confidence falling to 53.9, from 54.2, in August, mostly due to stock market turbulence, according to the Thomson Reuters/Ipsos consumer sentiment index
Where confidence heads next may hinge on an announcement next week by Federal Reserve Chairwoman Janet Yellen over whether the central bank will raise interest rates.
“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," Curtin said.