Econoday Economic Report: Consumer Sentiment February 25, 2011

2011 Economic Calendar

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Consumer Sentiment

Released On 2/25/2011 9:55:00 AM For Feb, 2011

	Prior	Consensus	Consensus Range	Actual
Sentiment Index - Level	75.1	75.1	74.8 to 76.5	77.5

Highlights
Consumer sentiment jumped sharply in February though the results are likely old news given the wild ups and downs underway in oil prices. The consumer sentiment index rose to a much higher-than-expected 77.5, up 2.4 points from the mid-month reading and implying a very strong reading of nearly 80 for the last two weeks of the month. And strength the last two weeks is centered in the leading component which is expectations. The assessment of current conditions shows little two-week change.

Consumer inflation expectations, which often move in line with changes in energy and food prices, show no change whether looking back two weeks or four weeks. This points to public expectations that Middle East turmoil will not disrupt oil supply, at least over the next year. One-year inflation expectations are unchanged at 3.4 percent with five-year expectations unchanged at 2.9 percent.

The rising unrest underway in Libya and in other Middle East oil producers is accelerating day to day, raising the possibility that responses in this report are already outdated. Still the markets are showing reaction, giving a boost to stocks and to the dollar.

Market Consensus before announcement
The Reuter's/University of Michigan's Consumer sentiment index for the mid-February reading rose 0.9 points from January to 75.1. This was only about one point shy of its mid-year 2010 recovery high in June but significantly above its recession low of 55.3 in November 2008. The two components, however, were mixed. The assessment of current conditions advanced to a reading of 86.8 from 81.8 in January. The expectations component was less positive, showing a decline to 67.6 at mid-month from January final at 69.3.

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

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.)

2011 Release Schedule

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