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Economy in Brief

Michigan Consumer Sentiment Dropped Hard
by Tom Moeller February 15, 2008

During early February, the University of Michigan's consumer sentiment index fell a hard 11.2% from the January average to a level of 69.6. A reading of 76 had been expected. It was the largest m/m decline since 2005 and it was to the lowest level since early 1992.

The index of expected business conditions during the next year fell the hardest with a 12.8% m/m decline to its lowest level since the recession of 1990. Expectations for business conditions during the next five years fell 10.2% while expectations for personal finances fell 6.9%.

The current conditions index more than reversed the January rise with a 9.5% drop. Current conditions for buying large household goods fell out of bed with a 15.1% plunge to the lowest level since 1992. The view of current personal finances fell slightly.

Expectations for inflation during the next twelve months were unchanged at 4.0% and for the next five to ten years expectations ticked up to 3.5%.

Opinions about government policy fell sharply. The 9.0% m/m decline was one of the largest and dropped this measure of opinions to the lowest level since 1993.

The University of Michigan survey is not seasonally adjusted.The reading is based on telephone interviews with about 500 households at month-end; the mid-month results are based on about 300 interviews. The summary indexes are in Haver's USECON database, with details in the proprietary UMSCA database.

University of Michigan Feb (Prelim. Jan Dec Feb  y/y 2007 2006 2005
Consumer Sentiment 69.6 78.4 75.5 -23.8% 85.6 87.3 88.5
   Current Conditions 85.4 94.4 91.0 -20.0% 101.2 105.1 105.9
   Expectations 59.4 68.1 65.6 -27.1% 75.6 75.9 77.4
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