U.S. Economy: Consumer Sentiment Drops After Katrina (Update3)

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<snip> The University of Michigan's preliminary index of consumer sentiment fell to 76.9 this month from 89.1 in August, surpassing even the drop following the 2001 terror attacks. The decline was the biggest since December 1980.

``These are abysmal numbers, suggesting a deeply pessimistic consumer in the first half of September,'' when gasoline prices peaked and officials were predicting as many as 10,000 deaths, said Christopher Low, chief economist at FTN Financial in New York. ``Things still appear grim, but are not nearly as bad as that. We look for some recovery in confidence as early as the final September report.''

The survey reinforced concerns that high gasoline prices may slow consumer spending and hurt sales at retailers such as Wal-Mart Stores Inc. and Best Buy Co. Government reports yesterday showed the hurricane pushed up consumer prices in August, drove manufacturers' costs higher this month and prompted the biggest weekly jump in jobless claims in nine years.

Low's forecast of 78 was the most pessimistic in a Bloomberg News survey of 53 economists, where the median estimate was 85. The preliminary reading is based on a phone survey of about 300 households. The university will release a final report with a sample size of 500 on Sept. 30. <snip> http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x1787003