NEW YORK – US consumers confidence declined in July to the lowest level this year as Americans grew more pessimistic about their finances. The Thomson Reuters/University of Michigan index of consumer sentiment dropped to 72 this month from June's 73.2 reading. The gauge was projected to rise to 73.5, according to a median forecast of 69 economists surveyed by Bloomberg News. The weakest quarter of hiring by companies in two years along with stock market volatility tied to Europe's debt crisis threaten to hold back the household spending that accounts for about 70 percent of the economy. Sales at retailers such as Hhgregg Inc. (HGG) may struggle as fewer consumers expect their incomes to increase. “The labor market has been pretty slow to recover, house prices are still low and there's a lot of nervousness about what's going on in Europe” and Washington, said Michael Hanson, a senior US economist at Bank of America in New York, who correctly forecast the July reading. “The economy looks like it's slowing.” Estimates for the Michigan confidence measure ranged from 71.5 to 76.5, according to the Bloomberg survey. The index averaged 64.2 during the last recession and 89 in the five years before the 18-month economic slump that ended in June 2009. Elsewhere, China's growth slowed for a sixth straight quarter. Gross domestic product expanded 7.6 percent in the second quarter from the same three months last year, the weakest in three years, the National Bureau of Statistics said today in Beijing. In Europe, Spanish lenders' net borrowings from the European Central Bank jumped to a record 337 billion euros ($411 billion) in June as the European bailout agreement failed to ease their access to funding. The University of Michigan's measure of confidence mirrors the Bloomberg Consumer Comfort Index, which stagnated last week and has fallen since the end of June. The Michigan survey's index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, decreased to 64.8, also the lowest this year, from 67.8. One in 10 consumers surveyed said they expected their inflation-adjusted incomes would increase in the next 12 months, according to economists at Barclays Plc in New York. Electronics retailer Hhgregg this week cut its full-year profit forecast amid declining sales of televisions. Dennis May, chief executive officer of the Indianapolis-based chain, said purchases in the fiscal first quarter are “an indicator of the difficulty in the current retail environment,” according to a statement on July 10. The Michigan gauge of current conditions, which asks Americans whether they're better off than they were a year ago and if they think it's a good time to buy big-ticket items like cars, rose to 83.2 in July from 81.5. Employment growth has waned relative to its pace earlier this year. – Reuters
