U.S. consumer sentiment index likely to have dropped

U.S. consumer sentiment in August saw a huge drop possibly due to the two largest single-day equity market declines of the year. Markets dropped on news that the administration will proceed with tariffs on the balance of not yet taxed imports from China – mainly consumer good at this point – raising the spectre of a surge in the cost of holiday gifts.

News shortly thereafter that these new tariffs would be delayed until 15 December might stem the extent of the fall in consumer sentiment, but it is still expected to fall around six points, stated Wells Fargo in a research report.

“Financial markets rallied on the news, but the consumer may be growing weary of the constant stream of alternating “trade tensions are easing” and “trade tensions are escalating” narratives, or may not be paying attention at all. Regardless of the summer volatility, consumer confidence is still at historically high levels, with the unemployment rate holding sub-4% and wage growth gradually rising”, added Wells Fargo.