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 4/25/08 For Apr 2008 | ||||||||||||
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Highlights
Consumer confidence is at its lowest point since the early 80s according to the consumer sentiment index from Reuters/University of Michigan which fell to 62.6 from a mid-month reading of 63.2. The index for March was 69.5. The current conditions index fell more than 1 point from mid-month to 77.0 while the expectations component edged 1 tenth lower from mid-month to 53.3. If there is good news in the report it's that inflation expectations remained steady from mid-month, at 4.8 percent one year out, unchanged from mid-month, and 3.2 percent five years out, up only 1 tenth from mid-month. But against March, both of these readings are significantly higher, up 5 tenths and 3 tenths respectively. The dollar slipped in immediate reaction to the results which are likely to pressure stocks through the session.
The Reuter's/University of Michigan's Consumer sentiment index continues to show a loss of resolve in the consumer sector with expectations for growth falling and expectations for inflation rising. The Reuters/University of Michigan consumer sentiment index fell to 63.2 for its mid-April reading vs. 69.5 in March. The 63.2 level is the weakest since the recessions and inflation of the early 80s. Inflation expectations have heated up with the one-year reading at 4.8 percent in the latest month, up 5 tenths from the final March reading. The consumer's view of inflation is driven by weekly trips to the gas station and to the grocery store where inflation is at its worst.
Consumer sentiment Consensus Forecast for final April 08: 63.2
Range: 62.0 to 64.5
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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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