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Economy in Brief

U.S. Consumer Sentiment Faded Further
by Tom Moeller March 18, 2005

The preliminary March reading of consumer sentiment from the University of Michigan fell to 92.9. The 1.3% m/m fall was similar to the declines logged during the prior two months. Consensus expectations had been for a slight rise to 94.8. During the last ten years there has been a 75% correlation between the level of consumer sentiment and the y/y change in real PCE.

The reading of current conditions fell for the second month. The 1.7% decline was led by a 6.0% drop (-7.3% y/y) in the sentiment of families earning more than $50,000 per year. Sentiment in families earning less than $50,000 per year rose 7.0% (0.8% y/y).

Consumer expectations slipped 0.9% (-5.9% y/y) for the third consecutive monthly decline as the expected change in real income fell 4.7% (-8.0% 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.

Reexamining the Consumption-Wealth Relationship: The Role of Uncertainty from the Federal Reserve Bank of New York is Available here.

University of Michigan Mar Feb Y/Y 2004 2003 2002
Consumer Sentiment 92.9 94.1 -3.0% 95.2 87.6 89.6
   Current Conditions 107.3 109.2 0.5% 105.6 97.2 97.5
   Consumer Expectations 83.6 84.4 -5.9% 88.5 81.4 84.6
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