Consumer confidence unexpectedly drops slightly

WASHINGTON -- Consumer confidence unexpectedly dropped slightly this month amid increased concern about the outlook for the economic recovery.

The preliminary July consumer sentiment index from the University of Michigan and Thomson Reuters, released Friday, fell to 83.9 from the previous month’s 84.1.

Analysts surveyed by Bloomberg had expected an increase to 84.7.

Although consumers were less optimistic about the six-month outlook for the recovery, their view of the current state of the economy reached its highest level since July 2007, according to Reuters.

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The reading on current economic conditions rose to 99.7 this month from 93.8 in June.

The consumer expectations figure, which gauges sentiment about the direction of the economy over the next six months, dropped to 73.8 this month from 77.8 in July.

Consumer confidence dropped in the early spring as Washington politicians were unable to avert automatic federal spending cuts.

But it quickly rebounded as the stock market hit record highs.

Recent market turmoil because of concerns about a Federal Reserve pull-back of its stimulus efforts might be weighing on consumers this month.

Chris G. Christopher, Jr., director of consumer economics at IHS Global Insight, said last week’s positive June employment report and improvements in the housing market should lead to increased consumer confidence and rising spending the rest of the year.

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