Consumer confidence plummets in early July

Consumer confidence plunged to its lowest level in a year, below what was expected and a possible signal that Americans could pull back on spending. 

Sentiment dropped to 66.5 in early July, down from 76 in June, the lowest level since September 2009, according to Thomson Reuters/University of Michigan consumer sentiment index released Friday. 

As the job market continues to struggle to create openings for the nation’s unemployed, Americans expressed doubt about their incomes rising in the next year. 

Consumer spending is a key driver of the economy, and a decrease in consumption could impair the nation’s recovery. 

A drop in consumers prices — the third straight monthly decline — could help boost spending levels. 

The consumer price index, an inflation gauge, dipped 0.1 percent in June, according to a separate Labor Department report Friday. Energy prices dropped as well as food, airline fares, computers and personal care products.

Core prices, which exclude energy and food, rose 0.2 percent last month. Those prices have increased only 0.9 percent during the past year, below the Federal Reserve’s inflation target to keep interest rates near zero “for an extended period.” 

Although deflation has been mentioned by some economists, the Fed has predicted that inflation will hold steady or rise slightly by year’s end.