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Economy in Brief

U.S. Consumer Sentiment Extended Increase
by Tom Moeller July 1, 2005

The University of Michigan's final reading of consumer sentiment in June extended the early-month improvement and rose 10.5% versus May to 96.0, the highest level this year. Consensus expectations had been for a lesser increase to 94.6.

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, although the correlation has fallen in recent years.

The reading of current economic conditions improved sharply late in the month and for June overall rose 7.9% to the highest level since late 2000.

Consumer expectations added slightly to the gain earlier in the month and surged 12.9% following five months of decline.

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.

Consumption Taxes: Macroeconomic Effects and Policy Issues from the Federal Reserve Bank of Kansas City can be found here.
University of Michigan June May Y/Y 2004 2003 2002
Consumer Sentiment 96.0 86.9 0.4% 95.2 87.6 89.6
   Current Conditions 113.2 104.9 6.1% 105.6 97.2 97.5
   Consumer Expectations 85.0 75.3 -4.0% 88.5 81.4 84.6
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