July consumer sentiment lowest since March 2009
NEW YORK (Reuters) - Consumer sentiment fell in July to its lowest in more than two years as anxieties over stagnant wages and rising unemployment deepened, a survey released on Friday showed.
Concerns about the U.S. debt crisis also loomed large as lawmakers in Washington continue to wrangle over plans to raise the debt ceiling before the U.S. government runs out of money to pay its bills on Tuesday.
The Thomson Reuters/University of Michigan's final reading on the overall index of consumer sentiment came in at 63.7, down from 71.5 in June and the lowest reading since March, 2009. That is just below the preliminary July figure of 63.8 and the median forecast of 64.0 among economists polled by Reuters.
"While consumers may not fully understand the debate about the federal debt, they do understand the meaning of the oft repeated warnings of 'dire economic consequences'," survey director Richard Curtin said in a statement.
Confidence in government economic policies reached a new low under the Obama administration, with nearly half of consumers rating government economic policies as poor.
The survey's gauge of consumer expectations slipped to 56.0, on par with economists' predictions but below June's 64.8.
The expectations index is at levels consistent with recession, but has not been down long enough to signal one definitively, Curtin said.
The survey's barometer of current economic conditions was 75.8 in July, down from 82.0 in June, and below a forecast of 76.3.
Just one in 10 consumers expected to earn more money in the year ahead and six in 10 did not expect gains in their household's finances during the next five years.
Data released Friday showed wages increased 0.7 percent for the three months ending in June.
Twice as many consumers reported hearing about new job losses compared with job gains in July.
"The absence of positive long-term financial expectations has turned consumer resilience into consumer fragility at the first sign of adversity," Curtin said.
Government data out Friday revealed weaker-than-expected U.S. economic growth in the second quarter and a sharp downward revision to growth in the first quarter. For more see
"At this point, growth is so close to zero and confidence is more important than it normally is," said Chris Lowe, chief economist at FTN Financial in New York. "The distraction of the debt ceiling fight could make a big difference."
The survey's one-year inflation expectation fell to 3.4 percent from 3.8 percent in June, while the five-to-10-year inflation outlook dropped slightly to 2.9 percent in July compared with 3.0 percent in June.