Consumer Confidence Dives on Scarce Jobs, Stagnate Income

U.S. economic outlookConsumer confidence plunged in July to a 9-month low as concerns over personal finances and the economic outlook intensified, signaling possible trouble ahead for an already sluggish recovery, a private survey reported.
Such sentiment could hold back consumer spending in the months ahead –  a vital component of the recovery.
Also today, the U.S. government reported its estimate on the second-quarter gross domestic product (GDP) growth at a 2.4 percent annual pace – down from a 2.7 percent rate in the first quarter.
Moreover,  the figures out today from the Thomson Reuters/University of Michigan’s Surveys of Consumers reflected a grim sentiment among Americans.
Its Sentiment Index was 67.8 in the July 2010 survey, down sharply from 76.0 in June, erasing substantial gains since 66.0 was recorded July 2009.
The Expectations Index, a component of the Index of Leading Indicators, declined by 10.7 percent in July, falling to the lowest level since March of 2009.
And the Current Conditions Index posted a sharp decline, but remained above last year’s 70.5.
Half of all consumers reported that their finances had worsened this July, a percentage unchanged from a year ago.  But the “smallest proportion ever recorded in the sixty year history of the surveys” anticipated an increase in their household’s income over the next 12 months, Thomson Reuters/University of Michigan reported.
Moreover, eight-in-ten consumers expected no improvement in the unemployment rate in the year ahead.
“Scarce jobs and stagnating incomes have been the top concerns of consumers for some time,” said Surveys of Consumers chief economist, Richard Curtin. “What changed in July was their recognition that the anticipated slowdown in the economy will keep jobs scarce for some time, while their uncertainties about future prospects were increased by the policies of the Obama administration.”