Econoday Report: Consumer Sentiment 31, 2007

2007 U.S. Economic Events & Analysis

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Consumer Sentiment

Definition
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 8/31/07 For Aug 2007

Sentiment Index - Level
Actual	83.4
Consensus	82.5
Consensus Range	81.0 to 86.5
Previous	90.4

Highlights
Consumer sentiment held steady in the last two weeks of August though weakness in the first two weeks, occurring during the meltdown in the credit market, made for a month-to-month decline, according to Reuters/University of Michigan's index which came in at 83.4 in August, little changed from 83.3 at mid-month but down from 90.4 in July. A big positive in the data, one consistent with this morning's readings for the PCE price index, was a tame reading for one-year inflation expectations, at 3.2 percent. Five-year expectations are at 2.9 percent. Markets showed no reaction to the 10:00 a.m. ET headlines that are led by comments from Federal Reserve Chairman Ben Bernanke.

Market Consensus Before Announcement
The Reuter's/University of Michigan's Consumer sentiment index fell more than 7 points to 83.3 in August. The index's two components, current conditions and expectations, both showed roughly equal weakness. Importantly -- inflation expectations -- the battle up at least to last week that the Federal Reserve was fighting, fell back: down 2 tenths for 1-year expectations to 3.2 percent and two tenths for 5-year expectations to 2.9 percent.

Consumer sentiment Consensus Forecast for final August 07: 82.5
Range: 81.0 to 86.5

Trends

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.)

Data Source: Haver Analytics

2007 Release Schedule

Released On: 2/2 3/2 3/30 4/27 6/1 6/29 7/27 8/31 9/28 10/26 11/21 12/21

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