Consumer sentiment as measured by Thomson Reuters and the University of Michigan fell in early July to the lowest level since March 2009, the news agency reported Friday. Consumers are increasingly pessimistic about falling income and rising unemployment, the survey found.
The index fell from over 71 in June to 63.8 in July, disappointing economists who expected an increase to 72.5. Consumer expectations fell, too, dropping nine points to 55.
Survey director Richard Curtin noted in a statement that despite past surveys with similarly low expectations occurring in recessions, “one month's data is insufficient to signal a renewed downturn, particularly if a last-minute agreement on the debt ceiling results in a partial restoration of confidence."
The survey also measured economic conditions; that index fell to 76 from 82.
The results show that consumer spending is unlikely to increase in the second half of 2011. Twice as many consumers reported hearing about job losses, according to Reuters, compared with job gains, and half of consumers said they thought the economy has worsened.
Keeping up with the overall trend of declining confidence, consumers who rated the government’s economic policies as “poor” increased to over half in July.
The inflation outlook, however, improved, with the one-year outlook falling to 3.4% from 3.8%, and the five-to-10-year outlook falling to 2.8% from 3%.
Earlier this week, the Family Office Exchange surveyed wealthy families and found they aren’t experiencing the same level of pessimism. In fact, they are likely to remain cautiously optimistic and expect a median return of 8% for 2011.