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Economy in Brief
U.S. FHFA House Price Index Rose Further in November
The FHFA House Price Index increased 1.0% m/m in November...
U.S. Energy Prices Are Mixed
The price of regular gasoline rose to $2.39 per gallon (-4.5% y/y) in the week ended January 25...
U.K. Retail Survey Shows Extreme Weakness
The CBI U.K. retail volume survey shows dramatically weakened data for January and for the February outlook...
Texas Manufacturing Activity Weakens Further During January
The Dallas Fed reported that its Texas Manufacturing Outlook Survey General Business Activity Index fell to 7.0 during January...
Chicago Fed National Activity Index Improves During December
The Federal Reserve Bank of Chicago's National Activity Index increased to 0.52 during December...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Robert Brusca September 11, 2009
Consumer sentiment rose sharply to 70.2 in August in the U of
M consumer sentiment preliminary report. The month’s rise in sentiment
was the 42nd largest monthly rise out of the last 380 monthly changes.
It was the fourth largest monthly rise in the index in this
recession/recovery period. The current index rose sharply making the
second highest jump in this cycle. Expectations rose by 4.2 points
marking a solid rise that is the sixth largest gain for expectations in
this cycle. The move in August preliminary report is led by the
substantial gain in the current situation.
Still in terms of cycle levels the current situation is weak
standing at the 38Th percentile of its recession cycle range, while
expectations are just off their cycle peak reading of 70.8 (June 2009).
Both expectations and the current situation are some 30% shy
of their respective past cycle peaks. Still the day’s report represents
a sharp gain from the cycle lows and builds some well-needed momentum
into this report after a period of being mired below peak and sinking.
The consumer remains the key to this economic recovery since
there will be no investment of note until consumer spending picks up.
Exports which are doing well are simply too small to lead recovery.
Dropping imports are fools gold for growth since they only drop if
domestic demand is weak and that is the road to perdition not to crisis
contrition.
Near term we look, not inventory building, but to less cutting
to boost GDP growth. But that will not spur growth unless final sales
pick up requiring more restocking and spurring new rounds of hiring.
The consumer sentiment report may not dictate consumer spending
month-by-month. But the broad sweep of consumer moods do set the stage
for and reflect true changes in consumer spending habits.
In the month consumers have seen their personal finance
situation improve and the buying conditions are said to be the best in
three months and better than anything 15 months before that. It is an
important rise in this assessment. Importantly, expected business
conditions in the next 12 months are the best in 24 months.
This is a good solid report. As the back-to-school season
kicks in, the month of September is a key one for assessing how well
the economy is mending. So far it looks good.
U of M Consumer Sentiment-Prelim | |||
---|---|---|---|
Sentiment | Current | Expectations | |
Prelim | 70.2 | 71.8 | 69.2 |
Last Month | 65.7 | 66.6 | 65.0 |
Mo/Mo % | 6.8% | 7.8% | 6.5% |
2-Mos | 6.4% | 1.8% | 9.5% |
Yr/Yr% | -0.1% | -4.3% | 3.0% |
In Recession: Max,Min, Avg & Percentile | |||
Max | 78.4 | 94.4 | 69.4 |
Min | 55.3 | 57.5 | 49.2 |
Average | 64.6 | 72.2 | 59.7 |
Percentile | 64.5% | 38.8% | 99.0% |
Cycle peak | 103.8 | 113.5 | 100.1 |
% of Peak | 67.6 | 63.3 | 69.1 |
U of M Consumer Sentiment-Prelim | |||
Sentiment | Current | Expectations | |
Max | 112.0 | 121.1 | 108.6 |
Min | 51.7 | 57.5 | 44.2 |
Average | 86.2 | 98.4 | 78.8 |
Percentile | 30.7% | 22.5% | 38.8% |
Rank % | 14.6% | 4.2% | 23.7% |
Since January 1970 |