Arab Today, arab today us consumer sentiment declines to 7month low
Last Updated : GMT 08:04:25
Arab Today, arab today
Arab Today, arab today

US consumer sentiment declines to 7-month low

Arab Today, arab today

Arab Today, arab today US consumer sentiment declines to 7-month low

New York - Arabstoday

US consumer sentiment cooled again in early July to its lowest level in seven months as Americans took a dim view of their finances and job prospects, a survey released yesterday showed. Separately, producer prices rose only slightly last month as energy costs dropped, suggesting inflation pressures remain muted and leaving the door open for more efforts to stimulate the economy by the Federal Reserve. Consumer sentiment eroded for the second month in a row after a streak of gains that started in September and Americans\' attitudes about their financial situations for the coming year reached an all-time low. Analysts said that while the drop in the main index was disappointing, attitudes were still not as dire as last summer when fears of an imminent recession were high. At the same time, however, \"The lack of a rebound, despite some help from lower gasoline prices and a modest bounce in equities in the past month, raises the specter of growth remaining stuck at a low level for a while,\" said Jim O\'Sullivan, chief US economist at High Frequency Economics. The Thomson Reuters/University of Michigan\'s preliminary reading on the overall index on consumer sentiment fell to 72.0 from 73.2 in June, frustrating economists\' expectations for a slight gain to 73.4. It was the lowest level since December 2011. Worries about the strength of the global economy have grown of late, along with concerns the euro zone debt crisis is taking its toll. After growing at a 1.9 percent annual rate in the first quarter, the US economy is not expected to have done much better in the second quarter. Only 19 percent of consumers expected to be financially better off in the coming year, the lowest proportion ever recorded by the survey. Americans were also gloomy about their longer-term prospects, with 39 percent anticipating their situation would be better in five years. \"You can\'t get overly concerned at the moment, but it\'s just an indication that the average household is pretty queasy about the current state of play and the US economy,\" said Cary Leahey, managing director and economist at Decision Economics. The gauge of consumer expectations slipped to 64.8 from 67.8, also the lowest since December. While there was widespread recognition of an economic slowdown, that did not have a large impact on consumers\' view of their present situation, and the barometer of current economic conditions rose to 83.2 from 81.5. Still, news of job losses was mentioned twice as frequently as job gains, the opposite of the first six months of the year. \"The greatest concern to consumers is that wage and job growth will remain depressed over the foreseeable future, and that these meager gains are likely to be further diminished in the years ahead by rising taxes and benefit cutbacks,\" survey director Richard Curtin said. Financial markets had little reaction to the data. US stocks rose more than 1 percent in late morning trading as data from China allayed concerns a slowdown in the world\'s second-largest economy would further hinder growth worldwide. While China\'s growth rate slowed to 7.6 percent, it was better than some in the market had feared and left the door open for more stimulus. The Labor Department said on Friday seasonally adjusted producer prices rose 0.1 percent last month. Analysts polled by Reuters expected the index to drop 0.5 percent. \"The modest 0.1 percent increase in US producer prices in June is another illustration that the Fed doesn\'t need to worry about inflation, at least not in the near-term,\" said Paul Ashworth, chief US economist at Capital Economics in Toronto. While wholesale prices of finished goods rose, costs for intermediate and crude goods fell, suggesting less inflation pressure down the road. Energy prices dropped 0.9 percent in June, dragged down by a record drop in prices for residential electric power, which fell 2.1 percent. Diesel fuel prices sank 8.8 percent. Higher food and gasoline prices took analysts by surprise, with gasoline prices up 1.9 percent. However, declines in prices for less-refined petroleum products, which go into making gasoline, pointed to softer costs ahead for gasoline. Cheaper energy prices are likely to help the economy as lower costs for fuels and other input prices leave companies with more money to spend on other things, such as equipment or even hiring. Planned spending cuts and tax hikes next year could send the US economy into recession, but the survey showed consumers are not yet overly worried about the so-called \"fiscal cliff,\" with Americans expecting Congress will take action to avert a sharp tightening in policy. But confidence in government economic policies remained near all-time lows at 11 percent. So-called core inflation, which strips out more volatile food and energy prices, rose 0.2 percent, in line with expectations, the Labor Department data showed. While overall inflation has cooled recently, core inflation has held at higher levels. Some policymakers at the Fed worry that further moves to lower borrowing costs could fuel higher inflation, though the central bank has said it was ready to do more to help the economy if needed. The Fed holds its next meeting at the end of the month, while Chairman Ben Bernanke will be delivering remarks to Congress next week. Americans\' inflation expectations stayed in check in July. The University of Michigan survey showed consumers\' one-year inflation expectation falling to its lowest level since October 2010 at 2.8 percent from 3.1 percent. The five-to-10-year inflation outlook held steady at 2.8 percent. In another sign of the impact of the debt crisis in the euro zone, printer maker Lexmark-International Inc cut its second-quarter outlook, hurt by the impact of exchange rates and weaker-than-expected demand in Europe. From arabnews

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