WASHINGTON – Consumer confidence in the U.S. unexpectedly declined in July to a four-month low as Americans’ outlook for the economy dimmed.
The Thomson Reuters/University of Michigan preliminary index of sentiment dropped to 81.3 this month from 82.5 in June. The median projection in a Bloomberg survey of 68 economists called for a July reading of 83.
Higher prices at grocery-store checkout lines are souring attitudes and straining household budgets as they take a bigger bite out of workers’ paychecks. Absent a pickup in wage growth, a higher cost of living raises the risk that consumer spending, which accounts for almost 70 percent of the economy, will cool.
“Consumers are having a little bit of trouble seeing further improvement later down the road,” said Gennadiy Goldberg, a U.S. strategist at TD Securities USA LLC in New York. “If you started to have wages pick up, you would probably have more improvement in buying expectations for things like homes and autos and durable goods.”
Another report showed the Conference Board’s index of leading economic indicators climbed 0.3 percent in June after a 0.7 percent May increase that was stronger than initially estimated.
Stocks rose, following the biggest drop since April for the Standard & Poor’s 500 Index, as Google Inc. advanced and concerns eased over crises in Ukraine and the Middle East. The S&P 500 climbed 0.4 percent to 1,966.8 at 10:36 a.m. in New York.
Estimates for the Michigan sentiment gauge in the Bloomberg survey of economists ranged from 80 to 85.2. The index averaged 89 in the five years before December 2007, at the beginning of the last economic slump, and 64.2 during the recession.
Friday’s figures corroborate the Bloomberg Consumer Comfort Index. The monthly gauge on consumer expectations of the economy dropped to 46 in July from 48.5 the prior month, which was the highest in a year. The weekly index of confidence held near a 2014 peak, figures showed Thursday. The measure of the state of the buying climate climbed to its second-highest reading in more than six years.