·
The final April reading of consumer sentiment from the University of
Michigan fell 9.9% m/m to 62.6, a bit more than the 9.1% decline in the
preliminary figure. The drop was larger than Consensus expectations and
it reduced the level of sentiment to the lowest level since 1982.
· The current conditions index within overall consumer sentiment was weaker than indicated in the preliminary report. It fell 8.6% m/m after a slight rise during March. The view of current conditions for buying large household goods fell a hard 9.7% (-26.3% y/y) and the view of current personal finances fell a somewhat lesser 7.5% (-27.7% y/y). The view of current buying conditions for large household goods fell 25.7% y/y and 11% of respondents thought that prices were too high, nearly the largest percentage since late 1996.
· The expectations
component of overall sentiment still accounted for the larger part of
the April decline with an 11.3% m/m drop. The index fell to its lowest
level since late 1990. Expectations for personal finances fell a sharp
10.7% m/m (-21.3% y/y). Expectations for business conditions during the
next year fell an even sharper 13.0% (-54.0% y/y) and expectations for
conditions over the next five years fell 12.3% m/m (-21.1% y/y).
· Opinions about government policy, which apparently influence economic expectations, fell 5.9% m/m (-29.7% y/y) which was an even deeper decline than in the preliminary report. The percentage of those surveyed who indicated that they thought government was doing a good job fell to 7%, the lowest level since 1991 while 43% indicated that they thought government was doing a poor job.
· The mean expected rate
of inflation during the next twelve months rose further to 5.7%, the
highest level since 1990. Has the Behavior of Inflation and
Long-Term Inflation Expectations Changed? from the Federal Reserve
Bank of Kansas City can be found here.
· 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.
· PCE and CPI Inflation Differential: Converting Inflation Forecasts also from the Federal Reserve Bank of Kansas City is available here.