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Economy in Brief

U.S. Consumer Sentiment Slipped Late in January
by Tom Moeller February 3, 2006

The University of Michigan reported that consumer sentiment for all of January fell a slight 0.3% from December to 91.2. The decline was due to a fall late in the month and compared to an initial read of 93.4. Consensus expectations had been for 93.0 for the full month.

During the last ten years there has been a 76% correlation between the level of consumer sentiment and the y/y change in real consumer spending.

The current conditions index rose just 1.1% compared to a mid-month 2.7% increase. The reading of buying conditions for large household goods rose less than initially estimated and the reading of personal finances showed the same, slight decline (-4.1% y/y). Consumers' assessment of gov't economic policy (-11.2% y/y) improved to the highest level since July.

Consumers' expectations slipped 1.6% instead of increasing that amount as indicated mid-month. Expectations for personal finances fell sharply (-9.8% y/y).

The mean expected inflation rate for the next twelve months increased to 3.8% from 3.5% expected mid-month.

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 Jan  Dec Y/Y 2005 2004 2003
Consumer Sentiment 91.2 91.5 -4.5% 88.6 95.2 87.6
   Current Conditions 110.3 109.1 -0.5% 105.9 105.6 97.2
   Expectations 78.9 80.2 -7.9% 77.4 88.5 81.4
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