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 8/17/07 For Aug 2007 | ||||||||||||
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Highlights
Trouble in the financial markets may now be pressing on consumer confidence as the Reuters/University of Michigan mid-month consumer sentiment index fell more than 7 points to 83.3. 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. Treasuries firmed in immediate reaction to the results which will further feed talk of a federal funds rate cut at or before the Sept. 18 FOMC.
The Reuters/University of Michigan's consumer sentiment index stood at 90.4 in July, up from 85.3 in June. Expectations also showed strong improvement in July at 81.5 vs. 74.7 in June. Current conditions showed moderate strength at 104.5 vs. 101.9 in June. More recently, various financial and economic events have been moving in opposite directions on confidence - such as lower gasoline prices (a positive) and a drop in stock prices (a negative).
Consumer sentiment index Consensus Forecast for preliminary August 07: 88.0
Range: 86.0 to 92.5
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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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