University of Michigan: Consumer sentiment dips this month

Michigan's index of consumer sentiment fell to 93.1 in July from 96.1 the previous month.

Richard Curtin, chief economist for the survey, blamed the drop on the "disappointing pace of economic growth."

On Thursday, the U.S. government reported that the economy rose at a steady but unspectacular annual rate of 2.3 percent from April to June.

Still, Curtin said the sentiment index has averaged 94.5 since December, the highest eight-month average since 2004. He attributed the healthy level of consumer optimism to "modestly positive news on jobs and wages."

The index was at 81.8 a year ago.

Employers added a solid 223,000 jobs last month, and unemployment has dropped to a seven-year low 5.3 percent.

"Gains in home prices and jobs have helped stabilize household wealth," economists Maninder Sibia and Steven Wood of the Economic Advisory Service wrote in a research note. "But recent headlines about financial volatility in Greece and China may have left consumers with a less positive outlook after moderate increase last month."

On Tuesday, the Conference Board, a business research group, said its consumer confidence index dropped to the lowest level since September, attributing the plunge to worries about the outlook for jobs, the ongoing debt crisis in Greece and a stock-market freefall in China.

The U.S. economy got off to a bad start this year, growing at an annual rate of just 0.6 percent from January through March, before gaining some momentum in the second quarter. Economists say the outlook is likely strong enough for the Federal Reserve to raise short-term interest rates later this year. The Fed has kept short-term rates near zero since December 2008.