Americans became less confident in the economy after Hurricane Harvey and Hurricane Irma swept across Florida and South Texas, according to the Survey of Consumers conducted by the University of Michigan. The Index of Consumer Sentiment decreased to 95.3 in the first part of September. This is down 1.5%from 96.8 in August, but still up 4.5%from 91.2 in September last year.
“Consumer confidence edged downward in early September due to concerns over the outlook for the national economy,” said Survey of Consumers Chief Economist Richard Curtin. “Consumers’ assessments of current economic conditions improved, however, with the Current Conditions Index reaching the highest level since November of 2000.” For reference, the Michigan average since its inception is 85.4. During non-recessionary years the average is 87.6 while the average during the five recessions is 69.3.
Last month, Curtin explained Hurricane Harvey could impact consumer confidence in the months ahead. Now, it seems to play the greatest role in bringing down confidence among Americans. “The two hurricanes had a greater impact on expected economic conditions,” he said.
“Across all interviews in early September, 9% spontaneously mentioned concerns that Harvey, Irma, or both, would have a negative impact on the overall economy,” Curtin stated. “Given the widespread devastation in Texas and Florida, it is not surprising to find these very negative initial reactions, nor would it be surprising if these negative assessments last longer than following most past hurricanes.”
The Current Economic Conditions index increased 2.7% from last month’s 110.9 to 113.9 and 9.3% from 104.2 last year. The Index of Consumer Expectations, however, created the drag on confidence with its decrease of 4.9%from last month’s 87.7 to 83.4 in September. However, this is still up 0.8% from 82.7 last year.