Consumers were slightly less optimistic in July, according to the Survey of Consumers from the University of Michigan and Thomson Reuters. The consumer sentiment index fell from 73.2 in June to 72.0 in July, its second consecutive monthly decline. This is the lowest level that it has been since December, but still – to keep it in perspective – higher than the low of last August, when the index stood at 55.7.
The decline in July’s reading was largely the result of reduced perceptions about where the economy is headed. A slight improvement in sentiment about the current environment was outweighed by increased anxieties about the future. Given the continuing struggles with Europe and the ongoing conversations about the U.S. fiscal situation, this is not surprising, and it is something that we see in other surveys, as well.
The present conditions component of this index, which was higher, was probably buoyed by lower energy costs. Indeed, overall inflationary expectations for the next year have fallen from 3.9 percent in March to 2.8 percent in July.
Chad Moutray is chief economist, National Association of Manufacturers.