Consumer confidence slipped in July, according to University of Michigan economist Richard Curtin, director of the Thomson Reuters/University of Michigan Surveys of Consumers.
All of the overall decline was in how consumers viewed future prospects for the national economy. The surveys, conducted by the U-M Institute for Social Research, have been monitoring consumer attitudes and expectations for over 60 years.
Nearly half of all consumers reported in July that their finances had recently worsened, with equal numbers attributing the decline to lower incomes and higher prices. Complaints about rising prices have shifted from gas to food prices. Just 10 percent of all consumers expected any inflation-adjusted gains in their incomes in the next year, and just 22 percent thought there was a better than even chance of real income gains over the next five years.
News of recent economic developments heard by consumers has grown more negative in the past few months, with about half as many reports of job gains in the past two months (18 percent, down from 34 percent). The national unemployment rate was expected to increase on balance in both June and July, following expected declines in the prior four months. Importantly, in the July survey half expected no change in the jobless rate during the year ahead, according to the report.
The Sentiment Index was 72.3 in the July 2012 survey, just below last month's 73.2 but substantially above last July's 63.7. Last year's level was depressed in reaction to the debt ceiling debate.
The July loss was concentrated in the Expectations Index, which fell to 65.6 in July from 67.8 in June, but it was well above last year's 55.9. The Current Conditions Index improved to 82.7 in July from 81.5 in June, and last year's 75.7. The gain was largely due to consumers' reports of greater price discounting on durables, according to the report.
-Jim McConville