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 7/13/07 For Jul 2007 | ||||||||||||
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Highlights
Consumer sentiment firmed to 92.4 in the early July reading from 85.3 in June, according to Reuters/University of Michigan data. The gain was centered where it should be, in the expectations component which rose nearly 10 points to 83.9. The big jump is hard to explain though gains in the stock market and the slip backward in gasoline prices may be helping. It also may reflect strength in the jobs market, an area that the Conference Board's report focuses on.
Inflation expectations, a central topic for policy makers, were mixed, showing a mild 1 tenth tick lower for 1-year expectations to 3.3 percent but a 2 tenth tick higher for 5-year expectations to 3.1 percent. Policy makers are stressing the need to anchor these expectations at lower levels.
Treasuries eased and the dollar firmed in reaction to the report which may through the session offset, to a degree, this morning's soft retail sales data.
The University of Michigan's Consumer sentiment index slipped to 85.3 in June from 88.3 in May. The index has come down notably from a recent peak in January at 96.9. While the recent numbers are not indicative of any dramatic weakening in the consumer sector, neither are they pointing to a robust consumer.
Consumer sentiment Consensus Forecast for preliminary July 07: 86.0
Range: 85.0 to 88.0
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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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