U.S. consumer sentiment as measured by the University of Michigan plunged in July to levels last seen in March 2009 amid debt-ceiling impasse, continuing high unemployment, says economist
July 18, 2011
– The debt ceiling impasse in Washington has combined with continuing high unemployment to deal a blow to consumer sentiment, an economist with Bank of America Merrill Lynch Global Research said Friday.
Economist Joshua Dennerlein, analyzing the recent University of Michigan Consumer Sentiment Index report, said in a report that consumer confidence retreated in July to levels last seen in March 2009 during the throes of the recession.
"We do not think this is the start of a new trend; rather, (it's) a lack of confidence due to the ongoing debt ceiling debate in Washington," he wrote. "We would expect that once the debt ceiling debate in Washington is resolved and the ongoing soft patch ends that we would expect a bounce-back in consumer sentiment."
The University of Michigan's sentiment index fell to 63.8 in July from 71.5 in June. Both confidence in current conditions and consumers' expectations about the future fell in July.
Dennerlein blamed both the debate between members of Congress and the White House over raising the debt ceiling debate and the recent news that high unemployment is persisting.
Opinions about government economic policy plunged on a separate index from 75 in June to 59 in July, well below the past year's average of 71.
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