Global| Jun 27 2008Michigan Consumer Sentiment Down Even Further
by:Tom Moeller
|in:Economy in Brief
Summary
The final reading of June consumer sentiment from the University of Michigan fell 5.7% from May to a level of 56.4. The decline was slightly greater-than-expected and it pulled sentiment 42% below the latest peak in early-2007. During [...]
The final reading of June consumer sentiment from the University of Michigan fell 5.7% from May to a level of 56.4. The decline was slightly greater-than-expected and it pulled sentiment 42% below the latest peak in early-2007.
During the last ten years there has been a 47% correlation between the level of sentiment and the three month change in real consumer spending.
The June current conditions index dropped 7.8% (-33.7% y/y) and the view of current personal finances dropped 13.7% (-37.3% y/y). The index of whether now is a good time to buy large household goods reversed an initial read of improvement and fell 4.6% (-32.5% y/y).
The expectations component of overall sentiment fell 3.7%, about the same as it did in May. The index fell to its lowest level since late-1990. Expectations for personal finances dropped the same 2.0% (-17.9% y/y) as it did in May. It was the lowest level since 1980 while expectations for business conditions during the next five years also fell sharply to the lowest level since 1991.
Opinions about government policy, which apparently influence economic expectations, reversed the May plummet and the index improved increased 21.6% after a like decline in May.
The mean expected rate of inflation during the next twelve months fell to 6.5% after the surge last month to 7.0%. During the next five years the expected inflation rate held steady at 4.0%.
The University of Michigan survey is not seasonally adjusted.The reading is based on telephone interviews with about 500 households at month-end; the mid-month results are based on about 300 interviews. The summary indexes are in Haver's USECON database, with details in the proprietary UMSCA database.
| University of Michigan | June (Final) | June (Prelim. | May | April | June y/y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|---|---|
| Consumer Sentiment | 56.4 | 56.7 | 59.8 | 62.6 | -33.9% | 85.6 | 87.3 | 88.5 |
| Current Conditions | 67.6 | 68.7 | 73.3 | 77.0 | -33.7% | 101.2 | 105.1 | 105.9 |
| Expectations | 49.2 | 49.0 | 51.1 | 53.3 | -34.1% | 75.6 | 75.9 | 77.4 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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