Consumer Sentiment Pushes Lower

Consistent with other recent readings on the mood of the American consumer, the Reuters/University of Michigan consumer sentiment index fell from 73.2 in June to 72.0 in the first of two readings for July, its lowest level since last December when it registered 69.9.

There was some good news in that the current conditions index rose, from 81.5 last month to 83.2, however, the expectations component fell from 67.8 to 64.8, also the worst reading since last December. Lower gasoline prices had a positive impact as one-year inflation expectations fell from 3.1 percent to 2.8 percent and the five-to-ten year outlook held steady at 2.8 percent.

A weaker job market, concerns about a global economic slowdown, and growing anxiety about their financial future were clear to see as only 19 percent of respondents said they expect to be better off a year from now, the lowest reading ever for this survey. Only 39 percent said conditions would be better in five years.

Richard Curtin, chief economist of the consumer survey, cited depressed wage and job growth as factors in the overall decline and went on to note, “The June loss among higher-income households was associated with a large drop in favorable ratings of economic policies and a growing recognition that federal policies to bridge the fiscal cliff will not even be discussed until the very last minute.”