| Consumer Sentiment |
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Released On 9/16/2011 9:55:00 AM For Sep(p), 2011
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Prior | Consensus | Consensus Range | Actual |
| Sentiment Index - Level | 55.7 | 56.0 | 52.0 to 59.6 | 57.8 |
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Highlights
Consumer expectations, in a reflection of the weak jobs market and recent trouble in the financial markets, are at the lowest point since the Iranian hostage and oil crisis more than 30 years ago. The assessment of the six-month outlook, which is the leading component of the consumer sentiment index, slipped four tenths at the mid-month reading to 47.0. As recently as May, this component was approaching a respectable 70.
The consumer's assessment of current conditions is much less troubled with the index at 74.5 for a nearly six point gain. The sizable gain in this component offset the dip in expectations to make for a 2.1 point gain in the composite consumer sentiment index to 57.8.
Yesterday's consumer price report shows wide and surprising pressure, pressure that this sample's report is picking up on. Inflation expectations are up two tenths on the one-year outlook to 3.7 percent and up one tenth on the five-year outlook to 3.0 percent. This pressure isn't due to any surge in gasoline prices which have been steady so far this month.
The stock market is edging off opening highs in reaction to this report. Next reading on consumer spirits will be the consumer confidence index which will be posted a week from Tuesday.
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Market Consensus before announcement
The Reuter's/University of Michigan's consumer sentiment index for the full month reading for July posted at 55.7 versus 54.9 at mid-month to imply over the last two weeks a 56.5 reading. A look back shows a 55 reading in November 2008 just after the Lehman-led bank meltdown. While conditions are poor currently, the good news is that consumers see a little improvement ahead. Improvement was in the leading component of expectations which rose 1.7 points from mid-month to 47.4. Not surprisingly, the assessment of current conditions actually weakened further, to a final 68.7 for August versus 69.3 at mid-month.
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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=21385)
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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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