American consumers' confidence in the current state of the economy is at a 12-year high, but their optimism about the future is deteriorating.
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The University of Michigan on Friday said its final reading on overall consumer sentiment during July was 93.4, up from a preliminary reading of 93.1 but down from 95.1 in June. Economists surveyed by The Wall Street Journal had expected a final July figure of 93.1.
An index that tracks expectations about the future declined to 80.5, its lowest level since last October. But an index tracking confidence in the current economic situation jumped to 113.4, its highest level since July 2005 and the second-highest reading since November 2000.
The report "confirms the softening in consumer enthusiasm in recent months, but we think that sentiment at these levels should still be supportive of consumer spending in the coming months," Barclays economist Blerina Uruci said in a note to clients. The overall index was up 3.8% in July from a year earlier.
Gauges of consumer, investor and business sentiment jumped following last year's presidential election. But some of those measures have drifted lower in recent months, and stronger sentiment didn't appear to immediately generate stronger spending. The Commerce Department on Friday said overall economic growth picked up in the second quarter after a slowdown in early 2017.
Richard Curtin, the Michigan survey's chief economist, said a partisan gap persists in expectations about the future between cheerful Republicans and downbeat Democrats. "Importantly, the partisan gap has narrowed in the past six months, mostly due to Republicans tempering their optimism," Mr. Curtin said. "The recent declines among Republicans were somewhat predictable, but the maintenance of extreme pessimism among Democrats is more surprising."
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In a separate report released Tuesday, the Conference Board said its index of U.S. consumer confidence rose in July to 121.1 from June's 117.3, reflecting more positive assessments of both the current situation and the outlook. The overall index peaked in March at 124.9, its highest level since December 2000.
Friday's report also showed public expectations about future price growth firmed somewhat, with average inflation of 2.7% expected over the next year and 2.6% inflation expected in five to 10 years. Both figures ticked up from June.
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(END) Dow Jones Newswires
July 28, 2017 11:25 ET (15:25 GMT)