Global| Aug 15 2008Michigan Consumer Sentiment Rose Slightly Early in August
by:Tom Moeller
|in:Economy in Brief
Summary
The University of Michigan's mid-August reading of consumer sentiment ticked up 0.8% from July to 61.7. The gain followed the 8.5% increase in July and the level about matched Consensus expectations for a reading of 62.0. The latest [...]
The University of Michigan's mid-August reading of consumer sentiment ticked up 0.8% from July to 61.7. The gain followed the 8.5% increase in July and the level about matched Consensus expectations for a reading of 62.0. The latest level of sentiment was the highest since March.
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 expectations component of overall sentiment led the August improvement with a 6.2% rise after the 8.7% increase during July. Expectations for business conditions during the next year rose again as did expectations for conditions during the next five years. They made up nearly all of a sharp July decline.The expected change in personal finances fell modestly after a strong July increase.
The current conditions index was weak and fell 5.2%. That reversed most of the improvement during July. The decline was due to a sharp decline in the index of whether now is a good time to buy large household goods. It reversed the strength in the July reading. The view of current personal finances also fell (-31.1% y/y) early this month.
The opinion of government policy, which apparently influences economic expectations, stabilized after a sharp decline in July. Only seven percent of respondents thought that a good job was being done.
The mean expected rate of inflation during the next twelve months fell further to 5.5%. During the next five years, however, the expected inflation rate rose to 3.8% .
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.
How Much Have U.S. House Prices Fallen? from the Federal Reserve Bank of St. Louis is available here.
| University of Michigan | August (Prelim.) | July | June | Aug. y/y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|---|
| Consumer Sentiment | 61.7 | 61.2 | 56.4 | -26.0% | 85.6 | 87.3 | 88.5 |
| Current Conditions | 69.3 | 73.1 | 67.6 | -29.6% | 101.2 | 105.1 | 105.9 |
| Expectations | 56.8 | 53.5 | 49.2 | -22.9% | 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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