NEW YORK – U.S. consumer sentiment fell more than expected in August from July due to record gasoline prices at the height of the summer driving season, a report said Friday.
The University of Michigan (search) said its reading on consumer confidence at the end of August was 89.1, down from a 96.5 final reading for July, according to a source who saw the subscription-only report.
The final August figure was below an initial reading of 92.7, which was what analysts had also expected for the final reading.
"The obvious culprit here is gasoline prices. This is a sign that tharting to come from the labor market," said Ryan Wang, an economist at HSBC (search).
Retail gasoline prices hit a record nationwide average of $2.61 per gallon last week, up 6.2 cents from the prior week, as a result of high demand and tight supply, the Energy Information Administration (search) said Monday.
The survey's expectations component finished at 76.9, down from a final July reading of 85.5. The gauge on consumers' views of their current economic conditions ended at 108.2, down from 113.5 in July.
"This seems to have more impact on people's expectations than current conditions. What changed was the price of gasoline, and people know that that can eventually lead to some kind of slowdown," said Kevin Logan, an economist at Dresdner Kleinwort Wasserstein in New York.
Consumer spending accounts for two-thirds of U.S. economic activity and has been vital to growth in this economic cycle.
Other recent surveys suggest that sky-high gasoline prices are hurting consumer confidence. The ABC News/Washington Post Consumer Comfort Index fell to -9 in the week ended Aug. 21 from -7 prior week.
The relationship between consumer confidence and retail spending has been tenuous in recent years. Consumers in surveys have been saying they worried about the economy, but their purchases of big-ticket items like cars and homes have been hovering at record levels.