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Economy in Brief

U.S. Consumer Sentiment Shows Dour Expectations
by Tom Moeller  October 11, 2013

The budget debate, government furloughs, lower stock prices and higher mortgage rates seem to be weighing on consumer attitudes about the future. Consumer sentiment from the Reuters/University of Michigan survey fell sharply this month to 75.2 (-9.0% y/y) from 77.5 during September. This latest level was the lowest since January. It also was weaker than Consensus expectations for 76.0. During the last ten years, there has been a 58% correlation between the level of sentiment and three-month growth in real PCE.

Worries about the future were behind last month's worsened sentiment reading. The expectation component fell sharply to 63.9 (-19.1% y/y), its lowest level since December of last year, from 67.8. In contrast, sentiment regarding current economic conditions ticked up to 92.8 from 92.6, and it remained 5.3% higher than last October.

The Reuters/University of Michigan survey data are not seasonally adjusted. The 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.

Reuters/University of Michigan (Q1'66 = 100) Oct Sep Aug Oct '12 2012 2011 2010
Consumer Sentiment 75.2 77.5 82.1 82.6 76.5 67.3 71.8
 Current Economic Conditions 92.8 92.6 95.2 88.1 85.6 79.1 80.9
 Consumer Expectations 63.9 67.8 73.7 79.0 70.7 59.8 66.0
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