Friday, January 14, 2011

USA Consumer Sentiment Drops in January (Charts) *Rising gasoline prices dampen mood*


Thomson Reuters/University of Michigan: USA Consumer Sentiment

USA Consumer Sentiment at 6-Month High

Official Statement (Reuters, January 14), 2011 - (Reuters) - Rising gasoline prices beat down U.S. consumer sentiment in early January, overshadowing an improved job outlook and passage of temporary federal tax breaks, a survey released on Friday showed. A year-end surge in gasoline prices ratcheted up consumer inflation expectations to their highest in more than two years, according to the latest data from Thomson Reuters and the University of Michigan. The surveys' preliminary January reading on the overall consumer sentiment slipped to 72.7, below 74.5 in December. It fell short of a 75.4 reading predicted by economists polled recently by Reuters.

Cycle History Consumer Sentiment in January (preliminary) is down -24.2 and -25.0% from the intermediate-term peak of 96.9 in January 2007. In 2004 the index was greater than 100. The current sentiment is up +17.4 and +31.5% from the Great Recession cyclical bottom of 55.3 in November 2008 (the all-time low). Therefore, the current sentiment is closer to the cyclical trough than peak.

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 (preliminary) now is above the 12-month moving average (71.7) for the 2nd consecutive month, after 5 consecutive months below. The 12-month moving average has leveled off and is decreasing slightly. The current sentiment is above the 24-month, and 36-month moving averages of 69.5 and  67.1, respectively. The 24-month moving average is ascending and the 36-month moving average has leveled off after descending. (The 24-month, and 36-month moving averages charts are not shown on this post).

Consumer Sentiment (Chart) Below is a chart of the latest 27 months of the Reuters/University of Michigan Index of Consumer Sentiment from November 2008 through the latest month reported, January 2011 (preliminary). November 2008 was the Great Recession and all-time low 55.3. The post-Great Recession high in June 2010 at 76.0. The general trend has been upwards since November 2008. (This preliminary data will be updated to the revised data on the chart later this month, without a subsequent post.)

Consumer Sentiment 12 Month Moving Average (Chart) Below is a chart of the latest 62 months of the Reuters/University of Michigan Index of Consumer Sentiment 12 Month Moving Average from December 2005 through the latest month reported, January 2011 (preliminary). The previous chart above, the Index of Consumer Sentiment, is rather like following the bouncing ball when charting human sentiment, confidence, mood, and outlook regarding the USA economy. Therefore, the 12 month moving average chart smooths out these short-term ups and downs. The pre-Great Recession peak was in August 2007 at 89.5 while the Great Recession low was in March 2009 at 60.1. The post-Great Recession peak has been in August 2010 at 72.0. The 12 month moving average has leveled off, after all the increases and decreases in the past 12+ months.

Commentary The Reuters/University of Michigan Index of Consumer Sentiment at 72.7 (preliminary) for January is disappointing and missed economists' higher estimates. This is after the 6 month high reported last month, December, of 74.5. The Conference Board monthly Consumer Confidence Survey was the first to dip, as reported in late December and reviewed here [USA Monthly Consumer Confidence Index Dips in December (Chart) *Modest decline, consumers remain tepid*]. Gallup is reporting somewhat more positive economic confidence on January 11, "U.S. Economic Confidence Improves in Early January 2011". However, the Gallup confidence is about the same as last year, 2010, so there has been no change in the past 12 months. The Conference Board will report their monthly Consumer Confidence Survey at the end of this month and Reuters/University of Michigan will revise the preliminary Index of Consumer Sentiment later in January.

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