US consumers cautious

U.S. consumers are showing more caution about the economy and the job market with the consumer confidence index falling to 103.9 in June from 108.5 in May, marking the lowest level since August 2006. Economists had expected a pullback to around the 105 mark.

The U.S. consumer has been resilient up till now but signs are starting to show that they may be taking a breather. Clearly rising borrowing costs and high gasoline and food prices are having an effect on confidence. We've already seen some of this softness in consumer spending showing up in early 2Q07 earnings of some major electronics retailers. Expect further softness in retail numbers as we move further into 2Q07 earnings season.