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Consumer Sentiment Falls Sharply in August: U. Michigan

U.S. consumer sentiment deteriorated in August to its weakest in a year as more expensive oil, declining home prices and turmoil in financial markets all hurt confidence.

The Reuters/University of Michigan Surveys of Consumers said its preliminary reading on consumer sentiment in August was 83.3, well below a median forecast of 88.0 and a sharp fall from the previous month's final reading of 90.4.

The survey's gauge of current economic conditions was 97.7 in early August, the lowest in 11 months and below the previous month's reading of 104.5.

The survey's one-year inflation expectations index came in at 3.2 percent, the lowest in five months and a drop from a reading of 3.4 percent in the previous month.

Consumer sentiment is often taken as a proxy on future consumer spending, which accounts for two-thirds of the U.S. economy.

Reflecting growing worries about the U.S. economic outlook and turbulence in financial markets, the Federal Reserve earlier on Friday cut its primary discount rate, or the rate the central bank charges commercial banks to borrow directly from it, by half a percentage point. The Fed also said the downside risks to economic growth had increased "appreciably."