July 15, 2016 10:50 AM, EDT

Consumer Sentiment Drops High Earners Shaken by Brexit

Chris Ratcliffe/Bloomberg News

Consumer confidence in the United States dropped in July as U.K.’s vote to leave the European Union flustered high-income earners.

The University of Michigan’s preliminary sentiment index fell to 89.5, a three-month low, from 93.5 in June. The median projection in a Bloomberg News survey called for no change.

The Brexit vote’s outcome caused global equity markets to briefly slump, giving Americans in the upper third of the income scale reason to shudder over their finances. The subsequent rebound in stocks means confidence probably will soon regain some of its lost ground, according to Richard Curtin, the Michigan survey’s director.

“Prior to the Brexit vote, virtually no consumer thought the issue would have the slightest impact on the U.S. economy,” Curtin said in a statement. “Following the Brexit vote, it was mentioned by record numbers of consumers, especially high-income consumers.”

The current conditions index, which measures Americans’ perceptions of their personal finances, declined to 108.7 from 110.8 in the prior month.

While slightly fewer Americans reported recent gains in finances, the least since 2007 said their balance sheets had deteriorated.

The gauge of expectations six months from now dropped to 77.1, the lowest since September 2014, from 82.4 in June.

Respondents expected the inflation rate in the next year will be 2.8%, compared with 2.6% in the June survey. The increase was propelled by those in the lower-income brackets, according to the report. Over the next five to 10 years, they project a 2.6% rate of price growth, the same as in June.

The June 23 referendum that solidified the U.K.’s decision to leave the European Union briefly sent financial markets into a tailspin. While the Standard & Poor’s 500 Index and the Dow Jones Industrial Average have since reached record highs, uncertain prospects for global growth after Brexit threaten to negatively impact business decisions and, in turn, weigh on consumer sentiment.

“While stock prices quickly rebounded, an underlying sense of uncertainty about global prospects as well as for the domestic economy have not faded,” Curtin said in the statement. “To be sure, the overall decline in the sentiment index was rather minor and could be anticipated to recover some of those losses in late July or early August.”