According to the Reuters and University of Michigan’s consumer sentiment preliminary data shows that consumer sentiment dropped in January, unexpectedly, at 80.4. Analysts were looking for a print of 83.4, up from December’s preliminary reading of 84.5. The survey showed lowered expectations among lower- to middle-income families, with the middle-class being the core driver of the economy.
The Survey’s director, Richard Curtin, said that “upper-income households benefited from continued strong gains in income as well as increases in stock and home values.” The housing sector seen a strong pickup in 2013, prior to tapering off by the end-of-the-year. However, some data suggested that the primary buyers were in the high-end of the market, while middle-income families were priced out of the market due to the sharp rise in prices and mortgage rates.
Curtin continued on the other fraction of the economy, “low- and middle-income households were mainly concerned about lackluster growth in employment and income, and anticipated less improvement in long-term prospects for the economy.”
Key sub-categories within the survey also fell. The barometer of the current economic climate feel from 98.6 to 95.2, and the consumer expectations fell from 72.1 to 70.9. Both were below forecasts of 98.5 and 74.2, respectively.
The survey’s expectations for inflation over one-year was flat at three percent, whereas the five-to-10-year inflation nudged up to 2.9 percent from 2.7 percent.