Survey: Global worries push consumer sentiment to lowest level since October 2014

WASHINGTON – Worries about the global economy pushed American consumers’ spirits to the lowest level in almost a year, the University of Michigan reported Friday.

The university’s consumer sentiment index fell to 87.2 this month from 91.9 in August. The third straight monthly drop left the index with its weakest reading since October 2014.

Richard Curtin, chief economist for the survey, said consumers are disturbed by signs of trouble in the Chinese economy, the world’s second-biggest, and continued economic stress in Europe.

“Consumers now believe that that global economic trends can directly influence their own job and wage prospects,” he said.

On Thursday, heavy equipment manufacturer Caterpillar, hurt by China’s slowdown, announced it would cut up to 10,000 jobs through 2018.

The Michigan index hit a low of 55.3 in November 2008, in the depths of the Great Recession. It began to recover and hit an 11-year high 98.1 in January. But it has now dropped in July, August and September.

“The drop poses modest downside risks for consumer spending,” Jesse Hurwitz, an economist at Barclays Research, wrote in a research note.

Still, the Michigan index is up from 84.6 a year ago.

The U.S. economy appears to be gathering strength. The government reported Friday that U.S. gross domestic product expanded at a robust 3.9 per cent annual pace from April through June. Unemployment has dropped to a seven-year low 5.1 per cent in August.