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Economy in Brief

Michigan Consumer Sentiment Fell Further
by Tom Moeller March 28, 2008

The University of Michigan's consumer sentiment index for all of March fell 1.8% m/m to 69.5. That was larger than the 0.4% decline in the preliminary reading and it was just slightly greater than Consensus expectations for a reading of 70.

The index of expected business conditions during the next year still accounted for all of the decline in March sentiment. The 3.7% decline followed an 8.4% February drop and left the index at its lowest since early 1992. Expectations for business conditions during the next year fell 14.8% (-51.6% y/y). hat m/m drop was double the decline in the preliminary report. And expectations for conditions over the next five years fell m/m rather than rose. Expectations for personal finances also were unchanged rather than posting a slight rise.

Opinions about government policy fell slightly m/m (-23.6% y/y) following the sharp 11.5% drop during February. The percentage of those surveyed who indicated that they thought government was doing a good job rose somewhat but 44% had a poor opinion.

Expectations for inflation during the next twelve months surged to 4.6%, the highest level in nearly two years though inflation expectations during the next five to ten years fell slightly to 3.3%. That was the same expectation as in the preliminary reading.

The current conditions index fell 0.5% m/m after the 11.2% February plunge. The view of current conditions for buying large household goods improved slightly but the view of current personal finances fell for the fourth month in the last five (-16.2% y/y).

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 March March (Prelim) Feb Jan March y/y 2007 2006 2005
Consumer Sentiment  69.5 70.5 70.8 78.4 -21.4% 85.6 87.3 88.5
  Current Conditions 84.2 84.6 83.8 94.4 -18.6% 101.2 105.1 105.9
  Expectations 60.1 61.4 62.4 68.1 -23.6% 75.6 75.9 77.4
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