| Consumer Sentiment |
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Released On 2/11/2011 9:55:00 AM For Feb(p), 2011
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Prior | Consensus | Consensus Range | Actual |
| Sentiment Index - Level | 74.2 | 75.0 | 73.5 to 78.5 | 75.1 |
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Highlights
Consumer sentiment continues to improve and is approaching its mid-year 2010 recovery high. The index rose nearly one point from January to 75.1 for the mid-month February reading, still about one point shy of its June level. Details are less positive showing a decline in expectations, which is the leading component, that was offset by a sharp rise in the assessment of current conditions. Yet the pessimism apparent in expectations will not encourage consumers to go ahead and make major purchases.
No change in inflation expectations is a clear positive in today's report and perhaps is a surprise given high gasoline prices and talk of increases ahead for food prices. In sum, the report is more positive than negative though the step backwards in the second half of last year, the result of weak labor market growth, is a reminder that there's no guarantee the improvement will continue.
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Market Consensus before announcement
The Reuter's/University of Michigan's Consumer sentiment index for the final reading for January rose 1.5 points to 74.2 from the mid-month reading of 72.7. While the final for January was marginally below the December final of 74.5, the implied reading for second half January is a healthier 75.7. This is based on half of the full month survey taking place for the initial reading and final reading including a remaining half of the full survey sample. For final January, details show special strength in expectations, the index's leading component which is also at its best level since June.
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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. Preliminary estimates for a month are released at mid-month. Final estimates for a month are released near the end of the month.
Why Investors Care
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![[Chart]](showimage.asp?imageid=20390)
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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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