·
Consumer sentiment in early December rose more than generally expected,
reported the University of Michigan. The 8.7% m/m rise to 88.7 added to
a 10.0% rise in November and beat Consensus expectations for an increase
to 85.0.
· During the last ten years there has been a 76% correlation between the level of consumer sentiment and the y/y change in real consumer spending.
· Consumers' expectations again improved sharply and the index rose 11.1% on top of a 10.1% November gain. Expected business conditions during the next year rose sharply for the third straight month though the level remained down 21.3% versus last year. Expectations for personal finances also rose sharply m/m but here again the index level remained lower than last year by 3.1%. The mean expected inflation rate for the next twelve months held steady m/m at 4.2% though that was below the 5.5% expected in October & September.
· The current conditions index added
6.4% to the 9.9% November gain but remained well depressed versus last
year. The reading of personal finances surged 12.6% (+3.6% y/y) and the
reading of buying conditions for large household goods added to
November's 12.9% jump ((-3.0% y/y). Weighing on sentiment is
consumers' reading of gov't economic policy (-20.0% y/y).
· The University of Michigan survey is not seasonally adjusted. The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.
· Why Hasn't the Jump in Oil Prices Led to a Recession? from the Federal Reserve Bank of San Francisco is available here.