Consumer Sentiment Plunges to 26-Year-Low (Ruth Mantell)

down

WASHINGTON (MarketWatch) -- Consumer sentiment sunk to its lowest level in 26 years in early April, according to a report on Friday from University of Michigan/Reuters, as worries about the economy, unemployment and inflation deflated hopes for future.

U.S. consumer sentiment index fell to 63.2 in early April from 69.5 in March. Sentiment is at its lowest level since March 1982. Economists surveyed by MarketWatch were looking for an April result of 68.8.

The expectations index fell to 53.4 in April -- the lowest since November 1990 -- from 60.1 in March, noted Ian Shepherdson, chief U.S. economist at High Frequency Economics. There's no sign that confidence bottomed out yet, he said.

"If sustained at this level, the index is consistent with a 0.5% year-over-year rate of outright decline in real consumption," Shepherdson wrote. "Bearing in mind that more than half of all consumption is non-discretionary (food, energy, housing, etc) this means discretionary spending will fall at a 1% rate or more, something we haven't seen since 1991."