Consumer Sentiment Crept Higher in July, but It's Still Depressed

Consumer sentimentOne wouldn't think that two tepid economic data points would be cause for minor relief among investors, but that seems to be case today, as consumer sentiment rose to a better-than-expected 67.8 in July, Reuters reported, after U.S. GDP growth slowed to a milder but not awful 2.4% rate in the second quarter. Still, investors should keep in mind that consumer sentiment remains at its lowest level in about six months.

A Bloomberg survey had expected the final July Reuters/University of Michigan consumer sentiment index to rise to 67 from the preliminary July reading of 66.5. The index was 76 in June, 73.6 in May and 72.2 in April. It hit a cycle-low of 51.7 in November 2008, during the acute stage of the financial crisis.

Consumers Sense Slowing Economy

Richard Curtin, Reuters/University of Michigan director of surveys, said the sentiment reading shows that consumers, like economists, are aware of the signs of a subpar U.S. economic expansion. "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," Curtin, said, in a statement.

In the final July survey, the consumer expectations component rose to 62.3 from the preliminary July reading of 60.6. This reading was 69.8 in June and 68.8 in May.

Also, the current conditions component rose to 76.5 from the preliminary July reading of 75.5. That component was 85.6 in June and 81 in May.

Consumers' one-year inflation outlook dipped to 2.7% in July from 2.8% in June, and the five-year inflation outlook rose to 2.9% in July from 2.8% in June.

Just a Bullet Dodged

Economists, business executives and policymakers monitor consumer sentiment because, historically, it correlates with consumer decisions to spend. In general, rising sentiment leads to higher consumer spending or the maintenance a spending level. Falling sentiment correlates with the reverse. And historically, the broad consumer spending category has accounted for 65% to 70% of U.S. GDP.

In sum, July's consumer sentiment, like the slack second-quarter 2.4% GDP growth rate, represents a bullet dodged, but little more than that. Although sentiment inched higher in July, it's stuck at a level suggesting that Americans have big concerns about the economy. Consumers appear to be waiting for the same thing the economists are: signs of more-vigorous job creation.

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cmdrhlamb

as if no conservative congressmen have been caught with eithics complaints.......

August 01 2010 at 1:21 PM Report abuse +1 rate up rate down Reply
Floyd A Zaepfel

WHAT CONSUMER CONFIDENCE ?????

July 31 2010 at 6:08 AM Report abuse +2 rate up rate down Reply
Jen

Another tape recorded message from the moron liberal

July 30 2010 at 11:29 PM Report abuse +2 rate up rate down Reply
Jen

Sluggish economy...GDP growth downgraded below 3%. Budget called for 4-5 in 2010 and 5-6 in 2011. Stop the bull. This presidents economic or should I say ideologic policies are going down. Moron liberals

July 30 2010 at 11:28 PM Report abuse +1 rate up rate down Reply
prognesub

Holy cow! June consumer sentimet numbers just came out, and the month of July
isn't over, but we already have the CS numbers for July. Seems like the business
folks are desperate to print rosy scenarios.

July 30 2010 at 9:23 PM Report abuse rate up rate down Reply
dlk7674

So the trillion dollar stimulis package is NOT working. Time to vote out the idiots who voted for this mess. Staddling our kids with this debt so that croonies could get payouts is DONE. This is not the kind of "change" our country needs.

July 30 2010 at 2:54 PM Report abuse rate up rate down Reply
1 reply to dlk7674's comment
caprt99

The poor spend. The rich hoard.
Consumer spending is what spurs economic recovery. Lower and middle class spend a far greater percentage of what they earn on goods and services than the very wealthy. Therefore, putting the money in their hands does far more to spur the economy then providing tax cuts to the very wealthy and hoping for trickle down. Really, trickle down sounds like "hey, let's give all the money to the super wealthy who don't need it in the hope that they will buy something."

July 30 2010 at 2:40 PM Report abuse +3 rate up rate down Reply
2 replies to caprt99's comment
carleronn

"in hope that they will buy something"...or, perhaps, invest the money in a business that hires morons like you

July 30 2010 at 4:25 PM Report abuse +1 rate up rate down Reply
Floyd A Zaepfel

Where do you get you statistics ? Joe's Bar and Grill ????

July 31 2010 at 6:14 AM Report abuse rate up rate down Reply
duey35

Consumer Sentiment Crept Higher in July, but It's Still Depressed
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Bad sentiment crept higher.
Have you seen Obamas ratings 3 more months and Bushes will be higher.

July 30 2010 at 2:09 PM Report abuse +2 rate up rate down Reply