The Thomson Reuters/University of Michigan consumer sentiment survey posted its lowest number since March 2009. Who says the recession is over?
“The preliminary reading for the consumer sentiment index dropped to 63.8 in July from 71.5 the month before,” Reuters said. The press agency added that the survey’s data on current economic conditions fell to 76.3, the lowest since November 2009, from 82.0 in June. The measure of consumer expectations was also at its lowest since March 2009, tumbling to 55.8 from 64.8, last month.
Because the data is so fresh, it is likely to be that the economy ground to a halt during the last 30 days. While the data does not measure business activity, it is still a powerful sign of a slowdown because US GDP growth is based at least two-thirds on consumer activity. The trouble is likely to ripple through business and housing industry, the data for which will be posted in a few weeks. There should also be an effect on major parts of the economy such as car sales and retail activity.
The final signal from the Thomson Reuters/University of Michigan July survey is that GDP for the third quarter is more and more likely to be close to 1%.
Douglas A. McIntyre
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