Report: Consumer Sentiment Cools Off in July
Consumer confidence unexpectedly cooled in July as Americans became less optimistic about the outlook for the economy.
Bloomberg reported that the Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 83.9 in July from 84.1 the month prior, today’s report showed. The median forecast in a Bloomberg survey called for a gain to 84.7. The gauge reached an almost six-year high of 84.5 in May.
The recent increases in mortgage rates and prices at the gas pump may have restrained consumers’ views on the economy in the next six months. At the same time, the group’s gauge of current conditions jumped to a six-year high as stock prices approached a record after falling in the middle of June.
“It’s a slip in confidence from recent highs rather than the start of a new downward,” said Gennadiy Goldberg, a strategist at TD Securities Inc. in New York. “As we get later in the year and the economy improves, consumers will start to see better numbers and they’ll notice that.”
Forecasts of the 66 economists for sentiment in the Bloomberg survey ranged from 80 to 88. The index averaged 64.2 during the recession that ended in June 2009, and 89 in the five years prior.
The Michigan survey compares with the weekly Bloomberg Consumer Comfort Index (COMFCOMF), which climbed to minus 27.3 in the week ended July 7, the highest level in more than five years, from minus 27.5. The figures showed Americans were more upbeat about their finances than at any time since April 2008, while a gauge of the buying climate increased to a nine-week high.
Other figures today showed prices paid to producers rose 0.8% in June, more than projected and the most since September.
The Michigan survey’s measure of current conditions, which takes stock of Americans’ views of their personal finance, increased to 99.7 in July from 93.8 at the end of last month.
The gauge of expectations six months from now fell to 73.8 from 77.8.
Mortgage rates this week climbed to the highest level in two years. The average 30-year fixed rate was 4.51% in the week ended yesterday, according to data from Freddie Mac. In November, it fell to a record low of 3.51%.
Gasoline prices have also increased this week. The average cost of a gallon of regular gas in the U.S. was $3.55 yesterday, up from $3.47 at the end of last week, according to figures from AAA, the nation’s largest motoring organization.