July Consumer Sentiment Drops to 9-Month Low

By Daniel Indiviglio

After learning this morning that second quarter economic activity didn't grow as quickly as it did in the first, we get more bad news: consumer sentiment is at its lowest level since November. Consumers are a very important part of the recovery, as their additional spending has been a significant addition to GDP growth over the past few quarters. But if the Thomson Reuters/University of Michigan's Surveys of Consumers is to be believed, that spending might be trending down so far this quarter, instead of continuing to grow.

The index compiled by Reuters and U Michigan fell sharply in July, to 67.8 from 76.0 in June. June had been the strongest level in nearly two-and-a-half years. From Reuters:

"Rather than an economy gaining strength, consumers now anticipate a slowing pace of growth, and rather than economic policies acting to improve prospects, economic uncertainty among consumers has greatly increased," Richard Curtin, director of the surveys, said in a statement.

This measure also isn't an isolated finding. Earlier this month, the Conference Board also reported its Consumer Confidence index declined significant, asĀ noted here. Gallup's polling concurs, indicating that sentiment really hasn't risen much from a year ago. A skittish consumer likely means a slow recovery, where unemployment will remain high for an extended period.

This article available online at:

http://www.theatlantic.com/business/archive/2010/07/july-consumer-sentiment-drops-to-9-month-low/60672/