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 2/29/08 For Feb 2008 | ||||||||||||
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Highlights
The bottom didn't fall out of the Reuters/University of Michigan consumer sentiment report which is a plus following Tuesday's very pessimistic confidence report from the Conference Board. The Reuters reading edged higher to 70.8 from a mid-month level of 69.6, though the latest level still compares very poorly with a 78.4 reading in January. The results suggest that confidence hit the skids in the early part of February, perhaps a positive that points to steadier results for March.
A big positive in the report is a 1 tenth dip in one year inflation expectations, though at a still elevated 3.6 percent. The dip back does suggest that price increases currently underway at the pump are not scaring consumers, who perhaps and hopefully are patiently adapting themselves to the problem.
Levels in this survey are very low but do not necessarily point to recession. That's about as much good news as an indicator can show as of late. There was little immediate reaction to the results.
The Reuter's/University of Michigan's Consumer sentiment index slowed abruptly in the mid-February reading, to 69.6 from 78.4 in January. The latest reading is the worst since the 1991 recession. Declines were posted for current conditions and especially for expectations which fell nearly 10 points to 59.4. The expectations index, a key reading that often leads the overall index, is also at its lowest point since the 1991 recession. But perhaps the worst news is a nasty 3 tenth spike in one-year inflation expectations to 3.7 percent. The Fed has been counting on inflation expectations to remain "anchored" but the latest report suggests that may be slipping. Nonetheless, five-year inflation expectations are unchanged at 3.0 percent.
Consumer sentiment Consensus Forecast for final February 08: 70.0
Range: 67.8 to 72.6
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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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