Dropping to a level not seen since last November, the Thomson Reuters/University of Michigan's final October reading on the overall index of consumer sentiment was posted on Friday at 67.7, which is down from last month’s 68.2.
Economists polled by Reuters had predicted a median level of 68.
Worries about the economy and government economic policies drove sentiment. Earlier this month the survey showed consumers’ view of administration policies reaching its lowest level since President Obama took office.
"Residents of nearly all local areas expressed economic discontent. It would not be surprising for consumer confidence to rebound following the election; it would be surprising if those gains proved to be more than temporary," said Richard Curtin, the survey’s director, in a statement.
Jonathan Basile, a Credit Suisse economist in New York, told Bloomberg in advance of the report’s release: “Main Street doesn’t really believe that the economy is out of a recession until the unemployment rate comes down. It’s difficult to see any kind of sharp move higher in confidence.”
With the jobless rate expected to stay above 9% throughout 2011, consumers will most likely remain spooked about spending, which is not good news for the economy. Consumer spending drives about 70% of the economy.
The economy did grow by about 2% in the last quarter, however, according to the release of GDP figures Friday, and some consumer spending was up—not by enough, however, to make a real dent in an economic situation beset by high unemployment, foreclosures, and pre-election uncertainty.
Averaging 89 in the five years prior to the recession’s beginning in December of 2007, the sentiment index has not climbed back to that level since the inception of the recovery in June of 2009.
Read about consumer prices and sentiment in September at AdvisorOne.com.