Consumer sentiment drops to lowest of the year

Consumer sentiment fizzled in July, falling to its lowest level of the year so far as Americans took a dim view of their job and income prospects, a survey released on Friday showed.

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The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment fell to 72.3 from 73.2 in June. It the second month in a row attitudes have cooled and the lowest level since December.

That was a touch higher than economists' expectations for it to hold steady with July's preliminary reading of 72.

"While consumers do not anticipate an economy-wide recessionary decline, they do not expect a pace of economic growth that could satisfactorily revive job and income prospects," survey director Richard Curtin said in a statement.

"Moreover, consumers have become increasingly convinced that current economic policies are incapable of solving the underlying problems facing the economy."

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Concerns of higher food prices appeared to be taking a toll, with 45 percent of consumers saying their finances had recently worsened, citing lower incomes and higher prices. Only 10 percent expected to see inflation-adjusted gains in their incomes next year.

While Americans did not expect another recession, half thought the economy had worsened in the past year. Confidence in economic policies remained near all-time lows with just 11 percent giving a positive view.

The survey's barometer of current economic conditions edged up to 82.7 from 81.5, while the gauge of consumer expectations slipped to 65.6 from 67.8.

The one-year inflation expectation fell to 3.0 percent from 3.1 percent. The five-to-10-year inflation outlook eased to 2.7 percent from 2.8 percent, suggesting consumers expect food price increases to be temporary.

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