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Economy in Brief

U.S. Consumer Sentiment A Bit Better
by Tom Moeller May 27, 2005

The University of Michigan's reading of consumer sentiment for all of May did fall 0.9% from the prior month to 85.9 but that was better than the mid-month reading of a 2.7% decline. Consensus expectations had been for a level of 86.0.

Sentiment still is down in each of the last five months and is off 16.3% from the January '04 peak. During the last ten years there has been a 75% (inverse) correlation between the level of consumer sentiment and the y/y change in real PCE, although the correlation has fallen in recent years.

The reading of current economic conditions recovered late in the month and rose for the first full month since January. Buying conditions for large household goods recovered sharply.

Consumer expectations recovered though expectations about personal finances remained depressed.

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 May April Y/Y 2004 2003 2002
Consumer Sentiment 86.9 87.7 -3.7% 95.2 87.6 89.6
   Current Conditions 104.9 104.4 1.3% 105.6 97.2 97.5
   Consumer Expectations 75.3 77.0 -7.7% 88.5 81.4 84.6
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