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Economy in Brief

Michigan Consumer Sentiment Improves From Mid-Month
by Tom Moeller November 27, 2009

Consumer sentiment during all of November improved from mid-month to a reading of 67.4 as measured by the Reuters/University of Michigan Index of Consumer Sentiment. The figure about matched Consensus expectations. Despite recent declines, sentiment was up by nearly one-quarter from the lows of last fall. During the last ten years there has been a two-thirds correlation between the level of sentiment and the three-month change real consumer spending.

The November reading on expected economic conditions fell to 66.5 from October's 68.6, although it did improve from mid-month. The primary weakness came in survey participants' outlook for business conditions over the next year. This move seems to show that the rise in September was a temporary blip. The reading of expected personal finances also fell to the lowest since August as more respondents felt that their personal finances would worsen .

The reading of current economic conditions fell from October and from mid-month. People's assessments of their current financial condition and buying conditions for large household goods both moved down to their lowest since August.

Expected price inflation during the next year slipped to 3.1%, down from October's 3.2% but up from the December reading of 1.7%.Respondents' view of government policy, which may eventually influence economic expectations, improved from October and remained up significantly from the low of October 2008. Nineteen percent of respondent thought that a good job was being done by government versus 30% who thought a poor job was being done.

The Reuters/University of Michigan survey data are not seasonally adjusted. The reading is based on telephone interviews with about 500 households at month-end. These mid-month results are based on about 320 interviews. The summary indexes are in Haver's USECON database with details in the proprietary UMSCA database.

University of Michigan November Mid-November October September Nov y/y 2008 2007 2006
Consumer Sentiment 67.4 66.0 70.6 73.5 21.9% 63.8 85.6 87.3
  Current Conditions 68.8 69.6 73.7 73.4 19.7 73.7 101.2 105.1
  Expectations 66.5 63.7 68.6 73.5 23.4 57.3 75.6 75.9

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