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Economy in Brief

Michigan Consumer Sentiment Is Stable At Improved Level
by Tom Moeller

Consumer sentiment isn't exactly ebullient, but it is improved. The University of Michigan reported that its index of consumer sentiment for the full month of March held steady at 73.6 with February. That was, however, up from the mid-month reading and up considerably from the low late in 2008. The figure was slightly higher than Consensus expectations. The index reached a high of 74.4 this past January. 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 slipped 0.7% m/m. Expectations for business conditions fell both for the next year fell (+77.3% y/y) and for the next five years (+30.2% y/y) as well. Expectations for personal finances improved (7.7% y/y) to the highest level this year.

Sentiment about current economic conditions rose just slightly (30.2% y/y) for the second month. The assessment of current personal finances (20.3% y/y) recouped a February decline and buying conditions for large household goods, including furniture, refrigerators, stoves & televisions (38.8% y/y) were unchanged.

Expected price inflation during the next year slipped to 3.4% but was up from the December 2008 reading of 1.7%.Respondents' view of government policy, which may eventually influence economic expectations, improved slightly 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 March Mid-March  February January March y/y 2009 2008 2007
Consumer Sentiment 73.6 72.5 73.6 74.4 28.4% 66.3 63.8 85.6
  Current Conditions 82.4 80.8 81.8 81.1 30.2 69.6 73.7 101.2
  Expectations 67.9 67.2 68.4 70.1 26.9 64.1 57.3 75.6
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