Consumer sentiment weakened in early July to its lowest in 11 months on a resurgence in fears about the economy, a year since the recovery began, a private survey released Friday showed.
The reversal in consumer sentiment was dramatic after it reached its strongest level in nearly 2-1/2 years last month on hopes of better job and credit conditions, according to Thomson Reuters/University of Michigan's Surveys of Consumers.
The survey's preliminary July reading on the overall index on consumer sentiment plummeted to 66.5 from 76.0 in June.
The figure was below the median forecast of 74.5 among economists polled by Reuters.
"Income and job prospects were extraordinarily weak and those bleak prospects have made consumers much more cautious spenders," Richard Curtin, director of the surveys, said in a statement.
This steep pullback in sentiment is ominous for the U.S. economy, which is already showing signs of slowing.
Consumer spending accounts for some 70 percent of the U.S. economy. The latest survey showed consumers' intention to buy durable items such as cars fell to its lowest in nine months.
"Moreover, consumers reported renewed weakness in the economy and were more likely to anticipate additional problems in the year ahead," Curtin said.
The survey's barometer of current economic conditions tumbled to 75.5 in early July, the lowest since November 2009.
This compared with 85.6 in June, which was the highest since March 2008. Analysts had predicted a figure of 84.0 for early July.
The survey's gauge of consumer expectations slid to 60.6, the lowest since March 2009. This compared with 69.8 in June, while analysts had predicted a reading of 68.4 in early July.
The measure on consumers' 12-month economic outlook deteriorated to 65.0 in early July, which was the lowest since April 2009.
It stood at 79.0 in June. In addition to worries about jobs and household finances, consumers expected inflation to pick up in the coming months.
The survey's one-year inflation expectations measure ticked up to 2.9 percent from 2.8 in June, while the five-to-10-year outlook index firmed to 2.9 percent from June's 2.8.
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