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 12/21/07 For Dec 2007 | ||||||||||||
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Highlights
The final consumer sentiment reading for December firmed slightly from the preliminary reading, up 1 point to a still mild 75.5. Inflation expectations eased back 1 tenth for the one-year outlook to 3.4 percent. Five-year expectations are at 3.1 percent, unchanged from the preliminary reading but up 2 tenths compared with November. Consumer confidence data are soft, but personal spending data released earlier this morning confirmed that consumer spending is strong while inflation pressures are on the rise -- both tied to higher gas prices not necessarily to robust spirits. Next data on consumer spirits will be the Conference Board's report on Thursday next week.
The Reuter's/University of Michigan's Consumer sentiment index dipped back more than 1-1/2 points to 74.5 for the preliminary December reading. The expectations component is the most closely watched category and it posted a nearly 3 point dip to 63.2 for its lowest reading since the invasion of Iraq. Confidence in the present situation edged higher to 92.1, but remained near a 3-1/2 year low. Inflation expectations are more trouble, up one tenth for the 1-year outlook to 3.5 percent and up 2 tenths for the 5-year outlook to 3.1 percent. The Fed will certainly be watching to see if inflation expectations are becoming unanchored.
Consumer sentiment Consensus Forecast for final December 07: 74.5
Range: 71.0 to 75.0
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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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