July 10 (Bloomberg) -- Confidence among U.S. consumers fell more than forecast this month, reflecting unemployment approaching 10 percent and higher gasoline prices.
The Reuters/University of Michigan preliminary index of consumer sentiment decreased to 64.6, the lowest since March, from 70.8 in June. During the expansion that began in late 2001 and ended in December 2007, the index averaged 89.2.
Unemployment last month rose to the highest level since 1983 while lower home values and rising gasoline costs are eroding Americans’ wealth. The report signals that consumer spending, which accounts for about 70 percent of growth, may remain subdued even as the economy starts to recover.
“It’s a reality check,” said Jonathan Basile, an economist at Credit Suisse Holdings Inc. in New York, who had predicted the index would drop. “It speaks to job and income concerns. This suggests a sluggish profile for consumer spending.”
The confidence index was forecast to dip to 70, according to the median of 59 economists surveyed by Bloomberg News. Estimates ranged from 65 to 72. The measure averaged 63.8 in 2008.
Stocks fell after the report on concerns the economic recovery will be delayed. The Standard & Poor’s 500 Stock Index was down 0.3 percent to 879.78 at 10:51 a.m. today in New York. The index is still 30 percent higher than on March 9, when it hit 676.53, the lowest level in more than 12 years.
The index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, plunged to 60.9, the biggest drop since October, from 69.2.
