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Economy in Brief

U.S. Consumer Sentiment Falls To Lowest Since July; Annual Reading Is Highest Since 2007
by Tom Moeller  December 21, 2012

The consumer lost the holiday spirit this month. The University of Michigan's Index of Consumer Sentiment in December fell to 72.9 from 82.7 last month. The reading also fell short of the mid-month figure, 74.5. The latest was the lowest since July and disappointed consensus expectations for 75.0. For the full year, however, sentiment improved to a reading of 76.5, its highest since 2007. During the last ten years there has been a 61% correlation between the level of sentiment and the three-month change in real personal consumption expenditures.

The reading of consumer expectations last month dropped a sharp 17.8% m/m to 63.8, its lowest level in twelve months. For the year, however, the reading of 70.7 also was the highest since 2007. The consumer remained relatively upbeat about today's economy. The sentiment reading of current economic conditions fell a lesser 4.1% m/m to 87.0, its lowest since September. For all of 2012, the reading improved to 85.6, its highest since 2007.

The Reuters/University of Michigan survey data are not seasonally adjusted. The readings are based on telephone interviews with over 300 households. Data can be found in Haver's USECON database. The forecast figure is from Action Economics and can be found in Haver's AS1REPNA database.

University of Michigan (Q1'66 = 100)
Dec Nov Oct Dec 2011 2012 2011 2010
Consumer Sentiment 72.9 82.7 82.6 69.9 76.5 67.3 71.8
Current Economic Conditions 87.0 90.7 88.1 79.6 85.6 79.1 80.9
Consumer Expectations 63.8 77.6 79.0 63.6 70.8 59.8 66.0
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