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Economy in Brief

U.S. Consumer Sentiment Lifted By Drop in Oil Prices
by Tom Moeller November 10, 2005

The preliminary reading of consumer sentiment in November from the University of Michigan rose 7.7% to 79.9, the highest level in three months. Consensus expectations had been for less of an improvement to 76.8.

During the last ten years there has been a 78% correlation between the level of consumer sentiment and the y/y change in real consumer spending.

The mean expected inflation rate for the next twelve months fell sharply to 4.6 from 5.5% expected in October. That prompted Consumer expectations to rise 5.7% and expected business conditions during the next year to surge 14.7%.

The current conditions index also improved 10.0% m/m (-4.2% y/y) due to 10% gains in personal finances and in buying conditions for large household goods.

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 Nov Oct Y/Y 2004 2003 2002
Consumer Sentiment 79.9 74.2 -13.9% 95.2 87.6 89.6
   Current Conditions 100.3 91.2 -4.2% 105.6 97.2 97.5
   Expectations 66.8 63.2 -21.6% 88.5 81.4 84.6
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