Consumer confidence in the US unexpectedly declined in July to a four-month low as Americans’ outlook for the economy dimmed. Higher prices at grocery-store checkout lines are souring attitudes and straining household budgets as they take a bigger bite out of workers’ paycheques.
Absent a pickup in wage growth, a higher cost of living raises the risk that consumer spending, which accounts for almost 70 per cent of the economy, will cool.
“Consumers are having a little bit of trouble seeing further improvement later down the road,” said Gennadiy Goldberg, a US strategist at TD Securities USA LLC in New York.
“If you started to have wages pick up, you would probably have more improvement in buying expectations for things like homes and autos and durable goods.”
A commerce department report this week showed retail sales climbed 0.2 per cent in June as department stores, clothing outlets and internet retailers led a broad-based advance. Demand is being underpinned by progress in the jobs market. – (Bloomberg)
