Michigan Consumer Sentiment Dips From Recent High

The Reuters/University of Michigan Index of Consumer Sentiment for mid-February fell modestly to 73.7 from is two-year high of to 74.4 reached last month. The latest figure fell short of Consensus expectations for a higher reading of 75.0; however, it compares favorably to the low of 55.3 in November 2008. During the last ten years there has been a two-thirds correlation between the level of sentiment and the three-month change real consumer spending. 

Expected economic conditions accounted for the decline with a 4.6% m/m drop to the lowest level since November. Expectations for business conditions during the next year and during the next five years fell moderately but expectations for personal finances fell to the lowest level in twelve months.

Sentiment about current economic conditions increased by another 3.7% to its highest level since March 2008. Assessments of current financial conditions were unchanged m/m at their highest since September of 2008. Buying conditions for large household goods, including furniture, refrigerators, stoves & televisions, also moved up another 5.3% to the highest level since January 2008.  

Expected price inflation during the next year slipped m/m to 3.3% but it was up from the December 2008 reading of 1.7%. Respondents' view of government policy, which may eventually influence economic expectations, slipped. Just sixteen percent of respondents thought that a good job was being done by government versus 40% who thought a poor job was being done, a twelve-month high.  

The Reuters/University of Michigan survey data are not seasonally adjusted. The reading is based on telephone interviews with about 500 households at month-end. These results are based on about 320 interviews. The summary indexes are in Haver's USECON database with details in the proprietary UMSCA database.