Consumer sentiment hits 89.5 in July vs. 93 estimate

Shoppers carry bags while walking through the Cherry Creek Shopping Center in Denver.
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A key measure of consumers' attitudes was lower so far this month, as high-income consumers digested Britain's surprise vote to leave the European Union.

The Index of Consumer Sentiment hit 89.5 in July's preliminary reading, the University of Michigan said Friday.

Economists expected the preliminary July consumer sentiment index to hit 93, down slightly from 93.5 in June's final reading, according to a Thomson Reuters consensus estimate.

"Prior to the Brexit vote, virtually no consumer thought the issue would have the slightest impact on the U.S. economy," said Richard Curtin, the survey's chief economist. "Following the Brexit vote, it was mentioned by record numbers of consumers, especially high-income consumers."

The monthly survey of 500 consumers measures attitudes toward topics like personal finances, inflation, unemployment, government policies and interest rates.

Attitudes toward present and future economic conditions both dimmed in early July, the survey showed.

The index of current economic conditions hit 108.7, down from 110.8 in June. The index of consumer expectations hit 77.1, down from 82.4 in June.

The decline in consumer sentiment was rather minor, Curtin said, and may recover in late July and early August. Jim O'Sullivan, chief U.S. economist at High Frequency Economics, compared the timing of the Michigan survey to other similar indexes.

There was no sign of any ongoing weakening in confidence in yesterday's weekly Bloomberg consumer comfort index report; the Bloomberg index rose to its highest since October," O'Sullivan said. "Meanwhile, long-term inflation expectations continue to be fairly stable."

Still, well-off consumers felt the personal wealth losses that accompanied the post-Brexit stock rout. Nearly one in four households in the top third of incomes mentioned Brexit, Curtin said.

"While stock prices quickly rebounded, an underlying sense of uncertainty about global prospects as well as the outlook for the domestic economy have not faded," Curtin said.

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