NEW YORK (Reuters) - Consumer sentiment fizzled in July, falling to its lowest level of the year, as Americans took a dim view of the employment situation and their income prospects, a survey showed on Friday.
The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment fell to 72.3 from 73.2 in June. It was the second month in a row attitudes have soured and the lowest level since December.
But the level was a touch higher than economists’ expectations for it to be unchanged from July’s preliminary reading of 72.
“While consumers do not anticipate an economy-wide recessionary decline, they do not expect a pace of economic growth that could satisfactorily revive job and income prospects,” survey director Richard Curtin said in a statement.
“Moreover, consumers have become increasingly convinced that current economic policies are incapable of solving the underlying problems facing the economy.”
Stocks held gains immediately after the data, while Treasury bond yields hit session highs.
The survey’s barometer of current economic conditions edged up to 82.7 from 81.5, while the gauge of consumer expectations slipped to 65.6 from 67.8.
Concerns of higher food prices appeared to be taking a toll, with 45 percent of consumers saying their finances had recently worsened, citing lower incomes and higher prices. Only 10 percent expected to see inflation-adjusted gains in their incomes next year.
Although the one-year inflation expectation edged down for the month overall, consumers expected a higher rate in the final survey than they did at the beginning of the month as concerns about food prices increased.
The year-ahead inflation expectation fell to 3.0 percent from 3.1 percent. The five-to-10-year inflation outlook eased to 2.7 percent from 2.8 percent, suggesting consumers thought food price increases would be temporary.
While Americans did not expect another recession, half thought the economy had worsened in the past year. Confidence in economic policies remained near all-time lows, with just 11 percent giving a positive view.
Reporting By Leah Schnurr; Editing by Kenneth Barry