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Economy in Brief

Michigan Consumer Sentiment Dips Again Though Uptrend Continues
by Tom MoellerMarch 12,2010

Consumers' mood became a bit more cautious this month but not enough to suggest a real darkening. The University of Michigan reported that its index of consumer sentiment dipped to 72.5 at mid-March from 73.6 during February. Consensus expectations were for 73.8.The index reached a high of 74.4 in January. Nevertheless, sentiment remained 26.5% higher than last year. During the last ten years there has been a 90% correlation between the level of sentiment and the y/y change in real consumer spending.

The index of expected economic conditions eased 1.8% m/m to the lowest level since November. Expectations for business conditions during the next year fell but during the next five years they rose moderately. Expectations for personal finances were stable at the lowest level in twelve months.

Sentiment about current economic conditions slipped to the lowest level since December. The assessment of current personal finances (14.1% y/y) and buying conditions for large household goods, including furniture, refrigerators, stoves & televisions (37.8% y/y) both slipped.

Expected price inflation during the next year dipped just slightly to 3.5% but was up from the December 2008 reading of 1.7%.Respondents' view of government policy, which may eventually influence economic expectations, improved modestly m/m but remained down 30.6% from its high last May. Fifteen percent of respondents thought that a good job was being done by government versus 40% who thought a poor job was being done, a twelve-month high.

University of Michigan Mid-March  February January March y/y 2009 2008 2007
Consumer Sentiment 72.5 73.6 74.4 26.5% 66.3 63.8 85.6
  Current Conditions 80.8 81.8 81.1 27.6 69.6 73.7 101.2
  Expectations 67.2 68.4 70.1 25.6 64.1 57.3 75.6
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