Consumer Sentiment Falls in July More Than Expected

Shoppers at Third Street Promenade outdoor shopping mall on August 17, 2012 in Santa Monica, California. (Photo: Reuters)

The Surveys of Consumers, a closely-watched gauge of consumer sentiment from the University of Michigan, fell more than the median forecast in July to 90.0. The survey declined from June’s reading of 93.5 and the median economic forecast called for a reading of 90.5 for the month.

“Although confidence strengthened in late July, for the month as a whole the Sentiment Index was still below last month’s level mainly due to increased concerns about economic prospects among upper income households,” Surveys of Consumers chief economist, Richard Curtin said. “The Brexit vote was spontaneously mentioned by record numbers of households with incomes in the top third (23%), more than twice as frequently as among households with incomes in the bottom two-thirds (11%).”

The many “experts” had fear-mongered ahead of the Brexit vote, which now is widely seen as having a mild short-term impact.

“Given the prompt rebound in stock prices as well as the tiny direct impact on U.S. trade, it is surprising that concerns about Brexit remained nearly as high in late July as immediately following the Brexit vote,” Curtain added. “While concerns about Brexit are likely to quickly recede, weaker prospects for the economy are likely to remain. Uncertainties surrounding global economic prospects and the presidential election will keep consumers more cautious in their expectations for future economic growth. Based on the strength in personal finances and low interest rates, real consumer spending is now expected to rise by 2.6% through mid 2017.”

Final Survey of Consumers Results for Consumer Sentiment in July 2016