Consumer Sentiment Inches Down in July

A final look at consumer sentiment for the month of July shows American confidence in the economy softened compared to June as expectations for the rest of the year became more tempered.

The University of Michigan/Thomson Reuters Index of Consumer Sentiment finished July at a reading of 81.8, below the 82.5 recorded in June but better than the 81.3 captured in the month's preliminary survey.

The index spent the first half of the year averaging 81.9, according to UMich's Surveys of Consumers group.

Friday's headline index felt some drag from the component measuring consumers' outlook, which slipped to 71.8 from 73.5 in June even as the economic picture brightened.

"Despite the recent gains in jobs and wages, consumers have yet to interpret these gains as an indication that more robust growth in jobs and wages will be forthcoming in the future," said Richard Curtin, chief economist for Surveys of Consumers. "The slow and uneven pace of the recovery in jobs and incomes during the past five years has made consumers unwilling to put much stock in favorable economic forecasts until repeatedly confirmed by positive realizations."

Meanwhile, the Current Conditions Index measured 97.4 at the end of the month, up from June's 96.6.

When asked to describe how their financial situation has changed, one in three households surveyed said their income had recently increased thanks to added jobs and higher wages, Surveys of Consumers reported.

However, more consumers also complained about higher prices.

Also of note was an observed slowdown in the housing market as moderating price appreciation and an uptick in inflation hinder sales.

"Although a resurgent housing market has been an important factor for recoveries in the past, investments in homes are no longer expected to post strong inflation-adjusted gains," the group said. "This leaves housing demand more vulnerable to even small changes in the pace of home appreciation and the inflation rate."