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Economy in Brief

U.S. Consumer Sentiment Improves
by Tom Moeller  July 26, 2013

The consumer feels good. The reading from the Reuters/University of Michigan survey of consumer sentiment during all of July rose to 85.1 from 84.1 in June. The full-month number improved from the preliminary figure of 83.8. The latest level was the highest since July of 2007 and was up from its August 2011 low of 55.8. Consensus expectations had been for a gain to 84.0. During the last ten years, there has been a 59% correlation between the level of sentiment and the three-month change in real personal consumption expenditures.

This month's increase in overall sentiment owed to offsetting movements in the index components. The July reading of current economic conditions rose to 98.6 from 93.8 in June. The figure was the highest since July 2007. Working the other way, the consumer expectations figure slipped to 76.5 this month from 77.8 in June. It nevertheless retained its improvement from an August 2011 low of 47.6.

The Reuters/University of Michigan survey data are not seasonally adjusted. The final monthly readings are based on telephone interviews with at least 500 households. Data can be found in Haver's USECON database. The expectations figure is from Action Economics and can be found in Haver's AS1REPNA database.

What's Weighing On Inflation? from the Federal Reserve Bank of Cleveland is available here.

Reuters/University of Michigan (Q1'66 = 100) July June May July'12 2012 2011 2010
Consumer Sentiment 85.1 84.1 84.5 72.3 76.5 67.3 71.8
 Current Economic Conditions 98.6 93.8 98.0 82.7 85.6 79.1 80.9
 Consumer Expectations 76.5 77.8 75.8 65.6 70.7 59.8 66
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