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 12/7/07 For Dec 2007 | ||||||||||||
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Highlights
The Reuters/University of Michigan consumer sentiment index dipped back more than 1-1/2 points to 74.5 for the preliminary December reading. Expectations is the most closely watched category showing 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 for its lowest reading in 3-1/2 years. 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 rise in inflation expectations is certain to be a hot topic at next week's FOMC meeting.
A host of consumer confidence readings are signaling trouble, but so far weakening spirits haven't derailed the holiday shopping season, evidenced by yesterday's chain-store reports, nor the jobs market, seen of course in today's steady payroll and unemployment readings. There was no reaction in the financial markets to today's report.
The Reuter's/University of Michigan's Consumer sentiment index fell to 76.1 for November's final reading from 80.9 for October. Consumer sentiment has been rattled by high gasoline prices, rising adjustable mortgage rates, uncertain stock markets, and slow job growth. But inflation expectations have not been lifted further as one-year inflation expectations showed no new pressures from mid-month, at 3.4 percent vs. October's 3.1 percent.
Consumer sentiment Consensus Forecast for preliminary December 07: 76.0
Range: 70.0 to 77.0
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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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