Harvey, Irma weigh on US consumer confidence

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WASHINGTON: US consumer confidence slipped in September, partly weighed down by hurricanes Harvey and Irma which slammed into Texas and Florida, according to a monthly survey released Tuesday.

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The monthly decline was less than forecast by analysts, who said the result actually showed underlying strength in consumer sentiment.

However, some parts of the Conference Board survey showed signs of increasing pessimism.

The consumer confidence index fell 0.6 points to 119.8, reversing two straight months of gains and bringing the level to its lowest point since June, according to the Conference Board.

A consensus forecast had expected the index to fall even further, to 119.4.

“Consumer confidence decreased slightly in September after a marginal improvement in August,” Lynn Franco, the board’s head of indicators, said in a statement.

“Confidence in Texas and Florida, however, decreased considerably, as these two states were the most severely impacted by Hurricanes Harvey and Irma.”

But on the whole, consumer attitudes about current conditions remained “quite favorable,” she added, saying that short-term expectations were also bullish.

However, consumers views of the current situation did darken slightly. The share of those saying conditions were “good” fell 0.6 points to 33.9 percent, while those saying conditions were “bad” rose by the same amount to 13.8 percent.

The short-term outlook also showed some signs of increasing concerns, as the share of those expecting conditions to worsen rose 1.9 points to 9.9 percent, while those foreseeing an improvement rose just 0.4 points to 20.2 percent.

The hit to confidence in the hurricane-affected zones was pronounced. In Texas, it fell 25.5 points to 119.9. And in Florida, it dropped 8.4 points to 126.7.

Economists say the storms, which forced millions to evacuate, caused tens of billions in damages and shuttered much of US oil production and refining capacity, should slow third-quarter GDP growth but spark a rebound at the end of the year.

Ian Shepherdson of Pantheon Macroeconomics said 2005’s Hurricane Katrina, which caused nearly 2,000 deaths in New Orleans, had caused a far larger dent in consumer sentiment.

“This report continues the pattern of much less bad post-hurricane data than after Katrina, despite the much bigger areas affected by Harvey and Irma,” he said in a research note.

“It might not be the last word, and we can’t rule out a further decline in October, but so far it seems likely that the overall national economy will suffer only a brief and modest hit from the hurricanes.”
AFP

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