The University of Michigan says that its index of consumer sentiment dropped to 81.9 this month from 84.1 in April. Still, Richard Curtin, director of the survey, says that confidence in the first five months of this year has been at the highest level since 2007, before the Great Recession began.
Nearly half of all households expect their inflation-adjusted income to decline over the next 12 months, the survey found. And among those that did anticipate gains, most expect increases of just 1 percent or 2 percent.
Consumer confidence is closely watched because spending by consumers drives about 70 percent of the economy.