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Economy in Brief

U.S. Consumer Sentiment Depressed
by Tom Moeller September 16, 2005

The September Consumer Sentiment Index from the University of Michigan cratered 13.7% m/m to 76.9, the lowest level in over ten years, as consumer expectations were depressed 17.3% by Hurricane Katrina (and probably by higher gasoline prices).

The 12 month expected inflation rate surged to 5.7% from 3.7% in August and that helped drop expectations for growth in real family income to the lowest level since 1992. Moreover, unemployment was expected to rise but interest rates were expected to fall.

The current conditions index fell 9.7% m/m, roughly double the decline in August. Personal finances were viewed being at their worst level in over two years and current buying conditions also fell hard.

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 Sept August Y/Y 2004 2003 2002
Consumer Sentiment 76.9 89.1 -18.4% 95.2 87.6 89.6
   Current Conditions 97.7 108.2 -5.8% 105.6 97.2 97.5
   Consumer Expectations 63.6 76.9 -27.7% 88.5 81.4 84.6
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