US consumer sentiment slips in July

Consumer sentiment in the US deteriorated a touch more than expected in July amid concerns about the UK’s vote to leave the European Union.

The University of Michigan’s final reading of the consumer sentiment index fell to 90.0 from 93.5 in June and 93.1 in July last year. Economists had been expecting a decline to 90.5.

Meanwhile, the current economic conditions index fell to 109.0 from 110.8 in June, but was up from last July’s reading of 107.2.

Finally, the index of consumer expectations dropped to 77.8 in July from 82.4 last month and 84.1 in July 2015.

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%). Given the prompt rebound in stock prices as well as the tiny direct impact on US trade, it is surprising that concerns about Brexit remained nearly as high in late July as immediately following the Brexit vote.

“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.”