Global| Sep 15 2006U.S. Consumer Sentiment Improved Further, Expectations Up
by:Tom Moeller
|in:Economy in Brief
Summary
Consumer sentiment in early September added to the gains of late August, according to the University of Michigan. The mid-month reading rose 2.9% to 84.4 on top of the late-August rise which limited that month's decline to 3.2%. [...]
Consumer sentiment in early September added to the gains of late August, according to the University of Michigan. The mid-month reading rose 2.9% to 84.4 on top of the late-August rise which limited that month's decline to 3.2%. Consensus expectations for an increase to 84.0.
During the last ten years there has been a 77% correlation between the level of consumer sentiment and the y/y change in real consumer spending and during those ten years sentiment has a 68% correlation with the change in nonfarm payrolls.
Expectations for the economy surged 13.4% m/m to the highest level since January. Expected business conditions next year and over the next five years improved sharply. The expected change in personal finances, however, improved just moderately. 
The reading of current economic conditions fell sharply m/m to the lowest level since last October. The current read of personal finances and perceived buying conditions for large household goods both fell.
Consumers' opinion about gov't economic policy was unchanged for the third month (0.0% y/y). Expected inflation during the next year fell sharply to 3.6%, its lowest level since February. The five to ten year expected rate of inflation also fell to 3.2%, reversing all of the rise during August.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.
| University of Michigan | Sept. (Prelim.) | August | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Consumer Sentiment | 84.4 | 82.0 | 9.8% | 88.6 | 95.2 | 87.6 |
| Current Conditions | 95.7 | 103.8 | -2.4% | 105.9 | 105.6 | 97.2 |
| Expectations | 77.1 | 68.0 | 21.8% | 77.4 | 88.5 | 81.4 |
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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