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Consumer satisfaction plummets
Posts sharp drop for second straight quarter straight; could be trouble for overall economic health.
May 17, 2005: 5:30 AM EDT

NEW YORK (CNN/Money) - American consumers, squeezed with less disposable income, are becoming increasingly dissatisfied with the purchases they do make, according to a recent study.

The American Customer Satisfaction Index dropped 0.8 percent in the latest quarter, the second biggest drop since 1997. The biggest drop occurred in the prior quarter.

The index, produced by the University of Michigan, noted large declines in satisfaction for hospitals, movies, wireless phone services and newspapers.

Gains were made in TV news, hotels and fast food restaurants, although not enough to offset the losses.

University of Michigan Professor Claes Fornell said in a statement that drops in the index were important because over the past 10 years every time the index fell by more than 0.3 percent, growth in consumer spending fell in the following quarter.

Consumer spending is the main engine behind U.S. economic growth.

The study said the same things that are squeezing consumer budgets -- higher energy prices, rising interest rates and falling inflation-adjusted wages -- are also forcing companies to scale back on customer service, which is contributing to the declining satisfaction rates.

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