International Partners: Sentiment among US consumers plummeted in September as their attitudes towards current and future expectations for the economy took a sharp turn for the worse. Key concerns centered on the global slowdown in general and China in particular as well as decreased optimism about future employment and wages growth in the world’s largest economy.

The acute decline in confidence coincides with a particularly uneven bounce back in US stocks following a turbulent month in which the two benchmark indices, the Dow Jones and the S&P500, briefly entered correction territory.

While International Partners says it doesn’t believe the data will influence the imminent Fed interest rate decision, it suggests that it may augur further deterioration of sentiment in the run up to the festive season and the expectations for retail sales.

“There is a growing sense both in Main Street and Wall Street that the economy is running on the fumes left over from the last round of quantitative easing. The expected third quarter acceleration in the economy has failed to materialize and there are hushed whispers discussing the justification for QE4,” said Tim Beresford, chief economist at International Partners.

The downturn in China has added to concerns at home that the US economy might not be able to accommodate higher interest rates especially if the US dollar remains at its current elevated levels against those of its trading partners.

“These fears have fed into Main Street’s psyche and the August jobs number didn’t help at all. Oil prices are subdued and that usually translates into an uptick in sentiment as consumers pay less for fuel but the fact the University of Michigan numbers tracked sharply lower illustrates the seriousness of the situation,” he added.

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