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Economy in Brief

U.S. Consumer Sentiment Plunged
by Tom Moeller October 15, 2004

The Mid-October reading of consumer sentiment from the University of Michigan plunged 7.1% to 87.5 on the heels of declines during the prior two months. Consensus expectations for a reading of 95.0.

During the last ten years there has been a 75% correlation between the level of consumer sentiment and the y/y change in real PCE.

The War in Iraq, the higher price of gasoline and several hurricanes which buffeted Florida are the likely culprits behind the fall in sentiment.

The reading of current economic conditions fell a sharp 4.0%, about the same as in September, but it was consumer expectations that took a powder with a 9.5% drop.

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 Mid-Oct Sept Y/Y 2003 2002 2001
Consumer Sentiment 87.5 94.2 -2.3% 87.6 89.6 89.2
   Current Conditions 99.6 103.7 -0.3% 97.2 97.5 100.1
   Consumer Expectations 79.6 88.0 -4.1% 81.4 84.6 82.3
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