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Economy in Brief

U.S. Consumer Sentiment Unchanged
by Tom Moeller March 17, 2006

The index of consumer sentiment remained unchanged early this month versus February at 86.7, according to the University of Michigan. Consensus expectations for an increase to 88.0.

Sentiment figures are not seasonally adjusted and 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 ticked up 0.6% m/m after a 4.3% decline during February. The index of personal finances rose just 0.9% (-3.4% y/y) after the 5.1% February collapse and the reading of buying conditions for large household goods remained unchanged (-0.6% y/y). Consumers' assessment of gov't economic policy fell to the lowest level this year. The index level of 80 (-14.0% y/y) compared to an average of 88 during 2005.

Consumer expectations slipped 0.4% from February, the third consecutive monthly decline. The economic outlook deteriorated sharply with the index of expected business conditions during the next twelve months off 5.2% (-12.5% y/y).

The mean expected inflation rate for the next twelve months rose m/m to 3.8%, still well below the 5.5% expected in October & September.

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.

Consumer Sentiment, the Economy, and the News Media from the Federal Reserve board can be found here.

University of Michigan March (p) Feb Y/Y 2005 2004 2003
Consumer Sentiment 86.7 86.7 -6.4% 88.6 95.2 87.6
   Current Conditions 106.2 105.6 -1.7% 105.9 105.6 97.2
   Expectations 74.2 74.5 -10.4% 77.4 88.5 81.4
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