The University of Michigan's Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending. Consumer confidence and consumer sentiment are two ways of talking about consumer attitudes. Among economic reports, consumer sentiment refers to the Michigan survey while consumer confidence refers to The Conference Board's survey. Why Investors Care
| Released on 6/29/07 For Jun 2007 | ||||||||||||
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Highlights
Consumer sentiment remains sluggish, as the Reuters/University of Michigan index came in at 85.3 for June, up a bit from the mid-month reading of 83.7 but down from May's 88.3. The index held in the 90s through the fourth quarter and showed a recent peak in January at 96.9. Since then the index has been softening with today's number consistent with a similar tone in the Conference Board's report released earlier in the week.
Details of the report show little change in the mix of expectations and current conditions, with the latter ahead of the former in what is often a signal for slowing overall levels ahead. Inflation expectations eased, a confirmation of this morning's PCE core index which came in at a sub-2% level of 1.9%. These data show 1-year inflation expectations at 3.4%, down a tenth from May, and 5-year expectations at 2.9%, down 2 tenths.
There wasn't much reaction to the data in the financial markets but the report is consistent with a slowdown in consumer spending, evident this morning in personal consumption data.
The University of Michigan's Consumer sentiment index fell back in early June, to 83.7 from 88.3 in May. While there is no component on the issue, high gas prices likely were responsible for the dip. Additionally, 12-month inflation expectations rose two tenths to 3.5 percent - likely concern for the Fed. Officials within the Fed have been focusing on the importance of anchoring inflation expectations.
Consumer sentiment Consensus Forecast for final June 07: 84.0
Range: 82.5 to 85.0
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Consumer sentiment is mainly affected by inflation and employment conditions. However, consumers are also impacted by current events such as bear & bull markets, geopolitical events such as war and terrorist attacks. Investors monitor consumer sentiment because it tends to have an impact on consumer spending over the long run (although not necessarily on a monthly basis.) |
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