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Economy in Brief

U.S. Consumer Sentiment Remains Depressed
by Tom Moeller  August 30, 2013

Despite a late-month improvement, the Reuters/University of Michigan survey of consumer sentiment during August fell sharply to 82.1 from an unrevised 85.1 in July. The mid-month reading of sentiment was 80.0. The level of sentiment this month is 10.5% higher than last year. Consensus expectations had been for less of a monthly drop to 81.0. The latest level of sentiment was the lowest since April but still was up sharply versus its August 2011 low of 55.8. During the last ten years, there has been a 58% correlation between the level of sentiment and the three-month change in real personal consumption expenditures.

This month's fall in overall sentiment reflected declines in both of the major component series. The August reading of current economic conditions fell to 95.2 (+7.3% y/y) from 98.6 in July. Accompanying that decline, the consumer expectations figure dropped to 73.7 (+13.2% y/y) this month from 76.5 in July.

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.

Does the Economy Need More Spending Now? from the Federal Reserve Bank of St. Louis can be found here.

Reuters/University of Michigan (Q1'66 = 100) Aug Jul Jun Aug'12 2012 2011 2010
Consumer Sentiment 82.1 85.1 84.1 74.3 76.5 67.3 71.8
 Current Economic Conditions 95.2 98.6 93.8 88.7 85.6 79.1 80.9
 Consumer Expectations 73.7 76.5 77.8 65.1 70.7 59.8 66
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