·
The University of Michigan's consumer sentiment index for early this
month slid 2.1% to 74.5 from an upwardly revised November level. It was
the third consecutive monthly decline and for the fourth quarter
sentiment looks to have dropped 10% from the 3Q average.
· The current conditions index stabilized a bit and rose 0.7% after a hefty 6.3% November decline. Conversely, the expectations index continued the prior two month's rate of decline and fell 4.5% m/m to 63.2, the lowest reading since 2005.
· Current buying conditions for large household goods improved modestly m/m but remained down 13.0% from last December. The view of current personal finances, however, slid 3.0% for the second sharp monthly decline (-17.6% y/y).
· Expectations for personal finances fell 3.5%, repeating a November drop (-10.5% y/y) and expectations for business conditions during the next year fell 11.0% (-38.1% y/y). Expectations for business conditions during the next five years, however, remained stable with the November level which was still depressed by nearly one quarter from a year ago.
· The rise in gasoline prices has raised expectations for inflation during the next twelve months to 4.5% from 4.3% in November and from 3.5% one year ago. For the next five to ten years expectations were for a 3.6% rise in prices.
· Opinions about government policy fell sharply. The 7.3% m/m decline brought this opinion measure down 14.6% from one year ago.
· The University of Michigan survey is not seasonally adjusted. The reading is based on telephone interviews with about 500 households at month-end; the mid-month results are based on about 300 interviews. The summary indexes are in Haver's USECON database, with details in the proprietary UMSCA database.
· Consumer sentiment, the economy, and the news media is a 2004 paper from the Federal Reserve Bank of San Francisco and it can be found here.
