By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) — A gauge of consumer sentiment dipped in January on concerns about rising food and fuel prices, according to poll results released Friday by Thomson Reuters and the University of Michigan.
The final January reading showed that the consumer sentiment index eased to 74.2 from 74.5 in December. An earlier reading for January estimated that the index had dropped to 72.7 because of higher gas prices.
“Given that consumers do not anticipate renewed wage growth, they are likely to again engage in selective spending cutbacks,” said Richard Curtin, chief economist with the consumer survey, in a statement.
“Consumers are now less able to smooth consumption by using credit cards since fewer households now have credit cards and those that have them are likely to have lower credit limits,” he said.
Economists polled by MarketWatch had expected a final January reading of 73.5.
“The survey data continued to show that household finances remained constrained,” wrote Barclays Capital analysts in a research note. “We expect consumers’ financial situations to improve as the labor market continues to recover, lifting overall consumer sentiment during the next year.”
Earlier this week, a separate report said consumer confidence jumped in January, on increased optimism about income and jobs. That report, from the Conference Board, is more sensitive to the labor market, while the Michigan sentiment reading is more sensitive to financial markets. Read more about the Conference Board’s confidence reading.
Details
The current-conditions index fell to 81.8 in January from 85.3 in December, led by less favorable views of buying conditions for durables, according to the Michigan report. Also, half of consumers expected that their incomes, adjusted for inflation, will endure small declines this year, according to the report.
“These concerns about price increases have spread beyond food and fuel prices to lower consumers’ buying attitudes toward a wide range of household durables, as well as vehicles, especially noticeable among higher income households,” according to the report.
Meanwhile, the index of consumer expectations rose to 69.3 in January from 67.5 in December, with anticipations for a stronger economy this year, according to the report.
Elsewhere Friday, the government reported that the U.S. economy grew at a faster pace in the fourth quarter, fueled by consumer-spending gains.
