July 31, 2012 (Chris Moore)
Consumer confidence continued to slip in July as the economic slowdown put consumers in a grim mood about their future financial prospects according to the latest Surveys of Consumers by Thomson Reuters/University of Michigan.
Although consumers did not expect the current economic slowdown to lead to another recession, they did not feel that the current pace of economic activity would not be sufficient enough to lead to future income and job growth.
Consumer’s views of their own personal finances continued to be remain dismal with nearly half of those surveyed in July reporting that their finances had worsened with equal numbers attributing the decline in their finances to lower incomes and higher prices.
Only ten percent of the consumers surveyed expected to see real income gains in the next year with only 22 percent expecting inflation-adjusted gains over the next five years.
Two of the three indices that make up the Index of Leading Economic Indicators fell from June to July, but all three indicators were still well above last year’s levels.
The Consumer Sentiment Index declined 1.2 percent to 72.3 in July, down from 73.2 in June but still up13.5 percent from 63.7 in July of last year.
The Consumer Expectations Index fell to a level of 65.6 in July, down 3.2 percent from a level of 67.8 in June but was up 17.4 percent from a level of 55.9 in July 2011.
The Current Conditions Index increased 3.6 percent to 82.7 in July, up from 81.5 in June and was 9.2 percent higher than the reading of 75.7 in July of last year.
Richard Curtin, Surveys of Consumers chief economist stated, “Consumers expect continued economic stagnation since they believe that current economic policies are incapable of solving the problems facing the economy. While politicians continue their semantic posturing about how and when the fiscal cliff will be bridged, consumers have begun to take precautionary steps. Although politicians understand that no consumer likes this game of chicken, they have pinned their political hopes on the other party being blamed, while ignoring the economic consequences of inaction. Even a temporary extension would decrease the impact of uncertainty on consumer spending in the second half of the year.”
Tags: Surveys of Consumers, Reuters/University of Michigan, consumers, economic slowdown, finances, recession, financial expectations