Global| Jul 30 2010U.S. Consumer Sentiment Falls Sharply from June
by:Tom Moeller
|in:Economy in Brief
Summary
Consumers remain glum. The full-month July reading of consumer sentiment, as measured by the University of Michigan, dropped sharply from June to 67.8, though that was up slightly from the mid-month reading. The latest was the lowest [...]
Consumers remain glum. The full-month July reading of consumer sentiment, as measured by the University of Michigan, dropped sharply from June to 67.8, though that was up slightly from the mid-month reading. The latest was the lowest reading since November. Nevertheless the index level remained up 22.6% since the low in November 2008. During the last ten years there has been an 89% correlation between the level of sentiment and the y/y change in real consumer spending.
The expectations index dropped sharply m/m but remained up 26.6% from the 2008 low. The readings for expected business conditions during the next year (-4.3% y/y) and expectations for business conditions during the next five years (0.0% y/y) both fell sharply from June. Expectations for personal finances also fell hard from June (-0.9% y/y).
Expected price inflation during the next year held steady 3.3% and remained up from the December 2008 low of 1.7%. Respondents' view of government policy, which may eventually influence economic expectations, retraced the gains of the prior two months and remained down sharply from its high last May. Fourteen percent of respondents thought that a good job was being done by government versus 41% who thought a poor job was being done.
Sentiment about current economic conditions also fell sharply from June to the lowest level since November. The assessment of current personal finances reversed its improvement (5.7% y/y) since February while perceived buying conditions for large household goods, including furniture, refrigerators, stoves & televisions fell hard to the lowest level since November (+10.8% y/y).
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. The summary indexes are in Haver's USECON database with details in the proprietary UMSCA database.
| University of Michigan | July | Mid- July | June | May | July Y/Y | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|---|
| Consumer Sentiment | 67.8 | 66.5 | 76.0 | 73.6 | 2.7% | 66.3 | 63.8 | 85.6 |
| Current Economic Conditions | 76.5 | 75.5 | 85.6 | 81.0 | 8.5 | 69.6 | 73.7 | 101.2 |
| Expectations | 62.3 | 60.6 | 69.8 | 68.8 | -1.4 | 64.1 | 57.3 | 75.6 |
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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