U.S. consumer sentiment dropped to its lowest point in more than three decades in early August, as fears of a stalled recovery gelled with despair over government policies, a survey released on Friday showed.
The Thomson Reuters/University of Michigan's preliminary August reading on the overall index on consumer sentiment came in at 54.9, the lowest since May 1980, down from 63.7 in July. It was well below the the median forecast of 63.0 among economists polled by Reuters.
High unemployment, stagnant wages and the protracted debate over raising the U.S. government debt ceiling spooked consumers,polled before the downgrade of U.S. sovereign debt by Standard &Poor's.
"Never before in the history of the surveys have so many consumers spontaneously mentioned negative aspects of the government's role," survey director Richard Curtin said in a statement. The survey's gauge of consumer expectations slipped to 45.7, also the lowest since May of 1980, from July's 56.0 and below a predicted reading of 55.3.
The Obama administration received poor ratings from 61 percent of respondents, the worst showing among all prior heads of state.
"This was more than the simple recognition that traditional monetary and fiscal policy measures were largely spent; it was the realization that the government was unable or unwilling to act," Curtin added.
Two-thirds of all consumers reported that the economy had recently worsened, and just one-in-five anticipated any gains during the year ahead.
Bad times in the economy were expected by 75 percent of all consumers in early August, just below the all-time peak of 82 percent in 1980.
The survey's barometer of current economic conditions was 69.3 in August, down versus 75.8 in July and below a forecast of 74.3.
The survey's one-year inflation expectation remained stuck at 3.4 percent, while the five-to-10-year inflation outlook also flatlined at 2.9 percent in August.