Consumer confidence declined in July on concerns global risks will dim prospects for the U.S. economy.
The University of Michigan’s preliminary index of sentiment dropped to 93.3 during the month from 96.1 in June, figures showed July 17. The median forecast in a Bloomberg News survey of economists called for a reading of 96. Consumers remained upbeat about employment and wages.
“When asked to explain how their finances had changed, more households mentioned income gains,” with the share increasing to 38% this month from 32% in June, Richard Curtin, director of the Michigan Survey of Consumers, said in a statement. “Slowly improving finances were anticipated for the year ahead.”
The Greek financial crisis and a slowdown in China were mentioned by respondents in the survey and help explain why Americans were less upbeat about the domestic economy. Even with the decline in sentiment, July marks the eighth straight month the Michigan gauge has been above 90, the longest stretch since a 17-month period ended in early 2005.
The decline in sentiment this month was due to less optimism among households with incomes less than $75,000.
The survey’s gauge of expectations six months from now fell to 85.2 from 87.8 in June. The gauge of current conditions decreased to 106 from 108.9 last month.
Attitudes toward big purchases, such as houses, were little changed in July from “very favorable levels” a month earlier, the report showed. Low home prices and borrowing costs were noted by 86% of all consumers.
“What we’re really missing in this recovery, especially among the bottom half of the income distribution, is more robust wage increases that consumers are certainly in dire need of to support their continued expansion in spending,” Curtin said on a Bloomberg conference call.
Americans expected an inflation rate of 2.8% in the next 12 months, up from 2.7% a month earlier, the report showed. Over the next five to 10 years, they also anticipated a 2.7% rate of inflation compared with 2.6% in the previous month.
The cost of living rose in June for a fifth month, paced by increases in rents. The consumer price index climbed 0.3% after a 0.4% May gain, the Labor Department said. Costs over the past 12 months advanced for the first time this year.
