Friday, September 17, 2010

USA Consumer Sentiment Drops to 13 Month Low (Chart) *August preliminary 66.6*


Thomson Reuters/University of Michigan: USA Consumer Sentiment Lowest Since August 2009

USA Consumer Sentiment Dips to 13 Month Low

Official Statement (Reuters) "The Thomson Reuters/University of Michigan's preliminary September reading on the overall index on consumer sentiment came in at 66.6, down from 68.9 in August. 'Confidence edged downward in early September, as consumers judged prospects for the national economy less favorably,' the survey's director Richard Curtin said in a statement.

Cycle History Consumer Sentiment in September (preliminary) is down -30.1 and -31.3% from the intermediate-term peak of 96.9 in January 2007. In 2004 the index was > 100. The current sentiment is up +11.3 and +20.4% from the bottom of 55.3 in November 2008 (the all-time low).

Trend Consumer Sentiment plunged in July 2010 to 67.8 from 76.0 in June. Previously, sentiment had been above 70.0 since December 2009 - seven consecutive months. Current sentiment of 66.6 is below the 12-month, 24-month, and 36-month moving averages of 71.4, 67.3, and 67.8, respectively. Sentiment dropped below the 12-month moving average in July 2010, after being above since April 2009 (15 consecutive months). Sentiment had been above the 24-month moving average since July 2009, until dropping below in this month, September. Sentiment dropped below the 36-month moving average initially in July 2010 after being above since September 2009 (10 consecutive months).

Chart (Consumer Sentiment) Below is a chart of the latest 57 months of the Reuters/University of Michigan Index of Consumer Sentiment from January 2006 through the latest month reported, September 2010 (preliminary). As can be seen, the last sentiment peak was in January 2007 at 96.9, a decline ensued, and the latest bottom was in November 2008 at 55.3 (which also was an all-time low). The latest sub-peak was in June 2010 at 76.0. A change in trend to the downside has occurred since.

Commentary The Reuters/University of Michigan Index of Consumer Sentiment at 66.6 is below the recent June 2010 peak of 76.0 and well below the January 2007 intermediate-term peak of 96.9. Current sentiment is disappointing after the increased optimism of late spring and early summer. I personally believe the partisan, divisive political campaign hyper-rhetoric leading up to the November elections may be a factor in this September decline (just my opinion). Gallup reported this week, "Americans More Pessimistic About Emerging From Recession" and "U.S. Economic Confidence More Negative Than a Year Ago". The Conference Board will report their monthly Consumer Confidence Survey at the end of this month.

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