(Bloomberg News) Confidence among U.S. consumers unexpectedly fell in July to the lowest level in more than two years, adding to concern that weak employment gains and falling home prices may keep households from spending.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 63.8, the weakest reading since March 2009, from 71.5 the prior month. The gauge was projected to rise to 72.2, according to the median forecast of 62 economists surveyed by Bloomberg News.
Slow jobs gains and falling home values may be weakening Americans' outlooks, underscoring Federal Reserve Chairman Ben S. Bernanke comments to Congress earlier this week. At the same time, gas prices still north of $3.50 may also be weighing on consumers, posing a risk that spending will cool.
"Consumers are still concerned about the economy and the primary driver of that is the sluggish labor market," said Ryan Wang an economist at HSBC Securities USA Inc. in New York said before the report. " The relatively low level of sentiment is in fact consistent with the modest growth of retail spending that we've seen, particularly in the last three months, and that pattern is likely to hold."
Estimates for the confidence measure ranged from 75 to 68, according to the Bloomberg survey. The index averaged 89 in the five years leading up to the recession that began in December 2007.