The Thomson Reuters/University of Michigan index of consumer sentiment dropped to 72 this month from June’s 73.2 reading. The gauge was projected to rise to 73.5, according to a median forecast of 69 economists surveyed by Bloomberg News.

The weakest quarter of corporate hiring in two years along with stock market volatility tied to Europe’s debt crisis threaten to hold back the household spending that accounts for about 70 percent of the economy. At the same time, gasoline prices have failed this month to extend a decline that began in early April.

“There hasn’t been a lot for consumers to kind of hang their hat on recently,” Thomas Simons, an economist at Jefferies Group Inc. in New York, said before the report. “It’s hard to imagine that there’s a lot of good feelings being generated for the consumer at the moment.”

Estimates for the Michigan confidence measure ranged from 71.5 to 76.5, according to the Bloomberg survey. The index averaged 64.2 during the last recession and 89 in the five years before the 18-month economic slump that ended in June 2009.

Another report showed prices paid to producers unexpectedly rose in June as food costs picked up. The producer price index climbed 0.1 percent after a 1 percent decrease a month earlier. The gauge minus energy and food rose 0.2 percent, as projected.

Bloomberg Measure

The University of Michigan’s measure of confidence mirrors the Bloomberg Consumer Comfort Index, which stagnated last week and has fallen since the end of June.

The Michigan survey’s index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, decreased to 64.8, also the lowest this year, from 67.8.

The index of current conditions, which asks Americans whether they’re better off than they were a year ago and if they think it’s a good time to buy big-ticket items like cars, rose to 83.2 in July from 81.5.

Employment growth has waned relative to its pace earlier this year. Private payrolls, which exclude government agencies, increased by 84,000 in June, capping the worst quarter for corporate employment since the first quarter of 2010. The jobless rate held at 8.2 percent.

Federal Reserve

The Federal Reserve has signaled that a further economic slowdown would bring growing support among policy makers for additional steps to spur the three-year expansion, according to minutes of the June 19-20 meeting released this week in Washington.

A few members of the Federal Open Market Committee said the Fed should ease policy to move the economy toward its targets for full employment and stable prices. Several others said more action could be warranted if growth slows, risks intensified or inflation seemed likely to fall “persistently” below their goal.

Cheaper energy costs are providing some respite for Americans. The price of a gallon of gasoline was $3.39 as of yesterday, according to AAA, the biggest U.S. auto group. While that’s down from a high this year of $3.94 in April, fuel prices are about a nickel higher than they were at the end of June.

Consumers in Friday’s confidence report said they expect an inflation rate of 2.8 percent over the next 12 months, the lowest since October 2010 and down from 3.1 percent in June.

Over the next five years, the figures tracked by Fed policy makers, Americans also expected a 2.8 percent rate of inflation this month, matching the figure in June.

American companies indicate global consumers have joined U.S. households in tempering their spending as economies cool.

“As many multinational apparel and consumer goods companies have indicated, growth markets, particularly those in Asia, have begun to exhibit a broad slowing trend,” Charles Victor Bergh, president and chief executive officer of Levi Strauss & Co., said on a July 10 earnings call.