Global| Aug 27 2010U.S. Consumer Sentiment Stalls
by:Tom Moeller
|in:Economy in Brief
Summary
The latest two reports on consumer sentiment suggest a gloomy state of affairs. First, the full-month August figure of 68.9 from the University of Michigan was lower than the mid-month reading. Second, this figure was nearly the [...]
The latest two reports on consumer sentiment suggest a gloomy state of affairs. First, the full-month August figure of 68.9 from the University of Michigan was lower than the mid-month reading. Second, this figure was nearly the lowest level since November. During the last ten years there has been an 88% correlation between the level of sentiment and the y/y change in real consumer spending.
The expectations index was roughly stable m/m at 62.9. The readings for expected business conditions during the next year rose (0.0% y/y) as did expectations for business conditions during the next five years (-6.3% y/y). The latter figure, however, was sharply lower as of mid-month and nearly the lowest since early-2009. Expectations for personal finances fell further to the lowest since early-2009 (-3.6% y/y).
Expected price inflation during the next year slipped from the mid-month read, falling m/m to 3.2%. However, the latest remained up from the December 2008 low of 1.7%. Respondents' view of government policy, which may eventually influence economic expectations, improved sharply to the highest since November. An increased seventeen percent of respondents thought that a good job was being done by government while a lessened 36% who thought a poor job was being done.
Sentiment about current economic conditions also improved slightly but remained near the lowest level this year. The assessment of current personal finances rose sharply from July (41.4% y/y). However, just 24% of respondents still thought their personal finances were in better shape than one year ago while 42% thought they were worse. Perceived buying conditions for large household goods, including furniture, refrigerators, stoves & televisions fell m/m (6.2% 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 | August | Mid-August | July | June | August Y/Y | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|---|
| Consumer Sentiment | 68.9 | 69.6 | 67.8 | 76.0 | 4.9% | 66.3 | 63.8 | 85.6 |
| Current Economic Conditions | 78.3 | 78.3 | 76.5 | 85.6 | 17.6 | 69.6 | 73.7 | 101.2 |
| Expectations | 62.9 | 64.1 | 62.3 | 69.8 | -3.2 | 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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