2008 U.S. Economic Events & Analysis
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Consumer Sentiment (p)
Definition
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 7/11/08 For Jul 2008
Sentiment Index - Level
 Actual 56.6  
 Consensus 56.0  
 Consensus Range 55.0  to  57.0  
 Previous 56.5  

Highlights
Consumer spirits remain severely depressed while consumer expectations for inflation remain extremely elevated, in what is more bad news for the economic outlook. Reuters/University of Michigan's consumer sentiment index inched higher, to 56.6 for the preliminary July reading vs. 56.4 in June. The expectations component fell 7 tenths to 48.3 while the current conditions component rose 8 tenths to 69.5. One-year inflation expectations jumped 2 tenths in the month to 5.3 percent with 5-year expectations unchanged at 3.4 percent.

Financial markets actually responded favorably to the report with stocks trimming losses and the dollar firming, though the report was released moments before what will be a special statement by Treasury Secretary Paulson on the status of Fannie Mae and Freddie Mac. But the Michigan report speaks of deep trouble in confidence which can't be a positive for the economic outlook or the inflation outlook.

Market Consensus Before Announcement
The Reuter's/University of Michigan's Consumer sentiment index has been near record lows as consumers have been hard squeezed by record gasoline prices, rising food price inflation, and fears of job losses. The consumer sentiment index dropped 3.4 points in June to a 56.4 reading. This is the third lowest reading for the series which goes all the way back to 1952 (lowest readings are 52.7 April 1980 and 51.7 May 1980). The expectations component was also quite weak, coming in at 49.2, down nearly 2 points from May. What should be of concern for the Fed are the recently elevated numbers for inflation expectations with the latest one year out number at 3.4 percent and five year inflation expectations at 5.1 percent.

Consumer sentiment Consensus Forecast for preliminary June 08: 56.0
Range: 55.0 to 57.0
Trends
[Chart] 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.)
Data Source: Haver Analytics | Consensus Data Source: Market News International and Thomson Financial

2008 Release Schedule
Released On: 1/18 2/15 3/14 4/11 5/16 6/13 7/11 8/15 9/12 10/17 11/14 12/12
Released For: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec


 
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