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Economy in Brief

U.S. Consumer Sentiment Declined
by Tom Moeller March 4, 2005

The February index of consumer sentiment from the University of Michigan fell to 94.1 versus the preliminary reading of 94.2 and 95.5 in January. Consensus expectations had been for 94.2. During the last ten years there has been a 74% correlation between the level of consumer sentiment and the y/y change in real PCE.

Consumer expectations fell 1.5% m/m but the decline was slightly less than initially estimated.

The reading of current conditions fell 1.5% m/m versus the preliminary read of no change. Sentiment regarding personal finances fell m/m but surged 9.0% vs. a year ago. During the last ten years there has been an 81% correlation between the current conditions index and y/y growth in payroll employment. Buying conditions for large household goods fell m/m but rose last quarter versus 4Q04.

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.

University of Michigan Feb Jan Y/Y 2004 2003 2002
Consumer Sentiment 94.1 95.5 -0.3% 95.2 87.6 89.6
   Current Conditions 109.2 110.9 5.4% 105.6 97.2 97.5
   Consumer Expectations 84.4 85.7 -4.6% 88.5 81.4 84.6
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