Global| Sep 26 2008Michigan Consumer Sentiment Rose With Lower Oil Prices
by:Tom Moeller
|in:Economy in Brief
Summary
The University of Michigan's reading of consumer sentiment in September jumped 11.6% though the gain was less than the 16.0% pop in the mid-month report. It still was the highest level since February and the gain to 70.3 contrasted [...]
The University of Michigan's reading of consumer sentiment in September jumped 11.6% though the gain was less than the 16.0% pop in the mid-month report. It still was the highest level since February and the gain to 70.3 contrasted with Consensus expectations for a reading of 70.0.
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 mean expected rate of inflation during the next year dropped to 4.6% with lower oil prices, though that was higher than a 3.9% expectation at mid-month. It was as high as 7.0% in May. During the next five years the expected inflation rate fell to 3.3%, the lowest level since mid-2005.
The expectations component of consumer sentiment led the increase in the total with a 16.1% jump, but the rise still left the reading down slightly from one-year ago. Expectations for business conditions during the next year jumped yet they remained lower than last year. Expectations for conditions during the next five years rose firmly to their highest since February.The expected change in personal finances also recovered to the highest level in one year.
The current conditions index rose a moderate 5.6% for the month to the highest level since April. The view of current personal finances rose to their highest level since April but the sense of buying conditions for large household goods fell m/m, down 25.7% y/y.
The opinion of government policy, which apparently influences economic expectations, rose slightly from August (-26.6% y/y). Only seven percent of respondents thought that a good job was being done by government, an unchanged reading since April.
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 | September | Mid-September | August | Sept. y/y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|---|
| Consumer Sentiment | 70.3 | 73.1 | 63.0 | -15.7% | 85.6 | 87.3 | 88.5 |
| Current Conditions | 75.0 | 76.5 | 71.0 | -23.4 | 101.2 | 105.1 | 105.9 |
| Expectations | 67.2 | 70.9 | 57.9 | -9.3 | 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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