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NEW YORK, July 29 U.S. 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
"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
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
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.
(Reporting by Alexandra Alper; Editing by James Dalgleish)