Consumer sentiment deteriorates

July 10, 8:40 AMEconomy ExaminerCharles Sherry

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(AP Photo/Elaine Thompson)

Four consecutive months of improving consumer sentiment came to a grinding halt in July after the University of Michigan reported that its gauge of consumer confidence fell from 70.8 last month to 64.6, far below the estimate provided by Bloomberg News of 71.5.

The data are clearly disappointing and suggest that weakness in sales reported by major retailers yesterday may continue into July.

Consumer sentiment has been improving for much of the year, signaling that the public sees an end to the recession just as faltering confidence early last year was a strong indicator that dark storm clouds were on the horizon.

But job losses have been steep and the unemployment rate appears to be headed past 10%.  The drop in jobless claims reported yesterday is encouraging, but the weekly number is volatile and difficulty in adjusting for seasonal factors accounted for much of the drop.

Gains in consumer confidence will probably be limited until job insecurities recede.

  For more info: Please see my blog Tomorrow's Economy Today.  The trade deficit narrows to nine-year low is also available.