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Economy in Brief

U.S. Consumer Sentiment Down
by Tom Moeller August 12, 2005

In August, the University of Michigan's preliminary reading of consumer sentiment fell unexpectedly versus July by 3.9% to 92.7. Consensus expectations had been for stability m/m.

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.

Consumer expectations fell a sharp 4.9% to the lowest level since May and the reading of current economic conditions fell 2.7%.

Sentiment amongst families earning more than $50,000 per year fell sharply and is down 5.5% y/y. While sentiment amongst families earning less than $50,000 also has fallen the last two months, it is up 0.2% 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.

University of Michigan August July Y/Y 2004 2003 2002
Consumer Sentiment 92.7 96.5 -3.3% 95.2 87.6 89.6
   Current Conditions 110.4 113.5 2.3% 105.6 97.2 97.5
   Consumer Expectations 81.3 85.5 -7.8% 88.5 81.4 84.6
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