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Consumer Sentiment Drops in Preliminary Reading

Consumer confidence slipped slightly in June as rising gas prices soured consumer outlook, according to a preliminary release of the University of Michigan/Thomson Reuters' consumer sentiment survey.

The index dropped from 81.9 to 81.2 in June with the decline entirely spurred by a decline in the expectations index. The expectations index, which "normally mirrors changes in equity prices and seasonally adjusted gasoline prices," according to Capital Economics, slipped from 73.7 to 72.2 in June.

"We suspect that a rise in the latter explains the decline, as stock markets have reached record high over the past week," said Capital Economics economist Amna Asaf.

While expectations turned slightly sour in June, the current conditions index experienced an increase from 94.5 to 95.4.

As such, Capital Economics expects strengthening confidence over the next few months.

While gas prices have impacted expectations and may push consumption growth lower than the first quarter's 3.1 percent, according to Capital Economics, other economic fundamentals showed promise in June.

The University of Michigan index revealed rising equity prices, improving labor markets, and declines in the cost of household borrowing.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.

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