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Economy in Brief

Michigan Consumer Sentiment's Earlier Gains Diminished
by Tom Moeller February 1, 2008

The University of Michigan's consumer sentiment index for all of last month did improve by 3.8% m/m to a reading of 78.4. But that gain was reduced by nearly one half from the rise reported at mid-month. A level for the month of 79 had been expected.

The current conditions index rose by 3.7% m/m, half the rise reported initially. The gain in current conditions for buying large household goods was reduced to 6.6% (-12% y/y). The gain in the view of current personal finances disintegrated to zero (-20.3% y/y) following two months of decline.

Improvement in expected business conditions during the next year was lowered slightly to 3.8% m/m (-22.3% y/y). Expectations for business conditions during the next five years disappeared (-42.4% y/y) but expectations for personal finances were slightly improved and rose 3.6% (-8.7% y/y).

Expectations for inflation during the next twelve months slipped to 4.0%. For the next five to ten years expectations similarly slipped to a 3.4% rise in prices, equal to the expected gain during all of last year.

Opinions about government policy rose, but by a reduced 5.4% m/m (-18.8% y/y).

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 Jan (Final) Jan (Prelim) Dec Nov Jan  y/y 2006 2005 2004
Consumer Sentiment 78.4 80.5 75.5 76.1 -19.1% 87.3 88.5 95.2
   Current Conditions 94.4 98.1 91.0 91.5 -15.2% 105.1 105.9 105.6
   Expectations 68.1 69.1 65.6 66.2 -22.3% 75.9 77.4 88.5
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