Consumer confidence dropped to a record low this month amid trade-war fears, Bank of America says

September 11, 2019

FILE PHOTO: Shoppers carry bags of purchased merchandise at the King of Prussia Mall in King of Prussia, Pennsylvania, U.S., December 8, 2018.  REUTERS/Mark Makela

Bank of America Merrill Lynch’s US consumer confidence indicator fell below 50 this month, the lowest reading on record.
It shows that consumers are rattled by the latest trade war escalation, BAML economists said.
US consumers are increasingly important to the economic expansion, and there are already signs that they’re spending less.
on Markets Insider.

Consumers are growing increasingly uneasy as the trade war rages on, according to Bank of America Merrill Lynch.

The firm’s US consumer confidence indicator dipped 3.8 points to 50.1, and even fell briefly below 50 this month, marking the lowest reading on record.

“The consumer appears to be rattled by the latest escalation in the US-China trade war,” Bank of America economists wrote in a note Wednesday. “The drop in confidence appears to be already having an impact on consumer demand.”

The indicator’s decline coincides with the latest round of tariffs on the final tranche of Chinese imports, which contains more consumer goods than other groups.

As the trade war continues, US consumer sentiment is becoming an increasingly important indicator of how the economy is doing, and if the current expansion is likely to continue. At this late point in the cycle, a strong consumer and solid labor-market conditions are crucial variables.

Read more: JPMorgan’s investment-strategy chairman lays out 3 reasons why the US will avoid recession through 2020

But if consumers stop spending it could lead the economy to decline. In August, the University of Michigan’s consumer-sentiment index showed its largest monthly decline since Decmber 2012. There are already a few signs that lower consumer confidence is leading to less spending, the Bank of America economists wrote.

The road ahead

If there isn’t progress on the trade war front, consumer confidence might not improve. Bank of America’s indicator …read more

Source:: Business Insider

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