Friday, October 15, 2010

USA Consumer Sentiment Dips to 3-Month Low (Chart) "Personal financial expectations were near all-time low"

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Thomson Reuters/University of Michigan: USA Consumer Sentiment Lowest Since July 2010


USA Consumer Sentiment Dips to 3-Month Low

Official Statement Oct 15 (Reuters) - Thomson Reuters/University of Michigan Surveys of Consumers' preliminary October consumer sentiment fell to 67.9 from 68.2 in the final September reading, according to a report released on Friday. Economists in a Reuters survey expected a preliminary October reading of 69.0. "Personal financial expectations were near their all-time low, and the steep decline in buying plans was related to uncertainty about consumers' future income prospects," the survey's director Richard Curtin said in a statement.

Cycle History Consumer Sentiment in October (preliminary) is down -29.0 and -29.9% from the intermediate-term peak of 96.9 in January 2007. In 2004 the index was greater than 100. The current sentiment is up +12.6 and +22.8% 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 -8.2). Previously, sentiment had been above 70.0 since December 2009 - seven consecutive months. This plunge negated the +7.8 increase in September 2009. Current sentiment of 67.9 is below the 12-month moving average but above the  24-month, and 36-month moving averages of 71.3, 67.8, and 67.4, respectively. Sentiment dropped below the 12-month moving average in July 2010, with the aforementioned plunge, after being above since April 2009 (15 consecutive months) and now has been below for 4 consecutive months. Sentiment has continued above the 24-month moving average since September 2009, fourteen consecutive months. Sentiment dropped below the 36-month moving average initially in July 2010 after being above since September 2009 (10 consecutive months). However, sentiment bounced back above in August 2010 and has remained above now for 3 consecutive months.

Chart (Consumer Sentiment) Below is a chart of the latest 46 months of the Reuters/University of Michigan Index of Consumer Sentiment from January 2007 through the latest month reported, October 2010 (preliminary). As can be seen, the last sentiment peak was in January 2007 at 96.9, at the beginning of the chart, 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. (This preliminary data will be updated to the revised data on the chart later this month, without a subsequent post)



Commentary

 The Reuters/University of Michigan Index of Consumer Sentiment at 67.9 (preliminary) 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, and not improving, 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 October preliminary decline (just my opinion). Gallup reported this week, "Lower- and Middle-Income Spending Lowest Since January '08" and for September, "U.S. Economic Confidence Remains Steady at 2010 Low". As reviewed here, The Conference Board monthly Consumer Confidence Survey for September was, USA Monthly Consumer Confidence Index at 7 Month Low "Confidence in state of economy remains quite grim". The Conference Board will report their monthly Consumer Confidence Survey at the end of this month.


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