A measure of U.S. consumer sentiment dropped in July for the second straight month, as consumers appear to be losing faith that changes in Washington will swiftly rejuvenate the slow growth rates in the U.S. economy.
The University of Michigan on Friday said the preliminary reading of its consumer-sentiment index was 93.1 in July, down from a June reading of 95.1 and a May reading of 97.1. Economists surveyed by The Wall Street Journal had expected a preliminary July reading of 94.7. The change in the index was driven by a decline in consumer's expectations for economic improvement in the future.
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"The data indicate that hopes for a prolonged period of 3% GDP growth sparked by Trump's victory have largely vanished, aside from a temporary snap back expected in the 2nd quarter," said Richard Curtin, the survey's chief economist in a statement. Mr. Curtin said the level of the consumer sentiment index is consistent with a growth rate "just above 2%."
Measures of U.S. consumer and business optimism surged following last year's presidential election. Many of the gauges have moderated in recent months, however. Another closely watched measure, the Conference Board's Consumer
Confidence Index crested in March, and has slid downward in recent months.
The index is still 3.4% higher in June from a year earlier.
Economists and financial markets follow these surveys on the basis that an increase in optimism should lead to an increase in consumer spending and other types of economic activity.
But so far, the optimism captured in these surveys this year, hasn't translated into a corresponding surge in consumer spending or economic growth. A separate report released this morning by the Commerce Department showed that retail sales fell for the second month in a row in June.
Write to Josh Zumbrun at Josh.Zumbrun@wsj.com
(END) Dow Jones Newswires
July 14, 2017 10:42 ET (14:42 GMT)