U.S. Consumer Sentiment Drops in Early August on Concerns About Delta Variant

By Maria Martinez

Consumer sentiment in the U.S. declined in early August as Americans' prospects for the national economy deteriorated due to the spread of the Delta variant.

The preliminary estimate of the index of consumer sentiment released Friday by the University of Michigan came in at 70.2 in August, down from 81.2 in July. The reading missed expectations from economists polled by The Wall Street Journal, who forecast the indicator at 81.3.

The consumer sentiment index fell by 13.5% from July and the only two larger declines in the index occurred during the economy's shutdown in April 2020 (-19.4%) and at the depths of the Great Recession in October 2008 (-18.1%).

The decline was caused by the pandemic's resurgence due to the Delta variant, said Richard Curtin, the survey's chief economist. Consumers have correctly reasoned that the economy's performance will be diminished over the next several months, he said.

"But the extraordinary surge in negative economic assessments also reflects an emotional response, mainly from dashed hopes that the pandemic would soon end," Mr. Curtin said.

The decrease in consumer sentiment in early August leaves the index at still subdued levels, well below the 101.0 reading registered in February 2020, before the Covid-19 pandemic hit.

Consumers' assessment of the current economic conditions fell to 77.9 in August from 84.5 in July. The index of consumer expectations--which reflects the balance of respondents anticipating improved business conditions in the next six months--dropped to 65.2 from 79.0 the prior month.

The final reading for the month will be published Aug. 27.

Write to Maria Martinez at [e-mail]

(END) Dow Jones Newswires

08-13-21 1030ET