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Economy in Brief

U.S. Consumer Sentiment Ratchets Further Downward
by Tom Moeller  October 25, 2013

Consumer sentiment, as measured in the Reuters/University of Michigan survey, continues to move lower. It fell sharply during October to a reading of 73.2 (-11.4% y/y). That compares to 75.2 at mid-month and 77.5 during September. This latest level was the lowest since December and was weaker than Consensus expectations for 75.0. 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 intensified as the expectations component fell further to 62.5 (-20.9% y/y), its lowest level since November 2011. In addition, the index of sentiment regarding current economic conditions fell to 89.9 from 92.6. That compares poorly to a slight uptick to 92.8 at mid-month, although it was 2.0% above October 2012.

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 73.2 77.5 82.1 82.6 76.5 67.3 71.8
 Current Economic Conditions 89.9 92.6 95.2 88.1 85.6 79.1 80.9
 Consumer Expectations 62.5 67.8 73.7 79.0 70.7 59.8 66.0
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