Monday, February 14, 2011

USA Consumer Sentiment at 8-Month High (Chart) *Further proof U.S. economy rebounding at stronger pace than expected*


Thomson Reuters/University of Michigan: USA Consumer Sentiment

USA Consumer Sentiment at 8-Month High

Official Statement (Reuters, February 11), 2011 - U.S. consumer sentiment rose to an eight-month high in early February, boosted by recent tax cuts and optimism about the labor market, but consumers were less sanguine about the economy in the longer term. Consumers expect to see improvement in the economy and job market this year, but the recovery was still anticipated to fall short and worries about inflation and its effect on wages weighed, according to the latest consumer surveys from Thomson Reuters and the University of Michigan.

Cycle History Consumer Sentiment in February (preliminary) is down -21.8 and -22.5 % from the intermediate-term peak of 96.9 in January 2007. In 2004 the index was greater than 100. The current sentiment is up +19.8 and +35.8 % 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 but nearing the middle between the two.

Trend Current sentiment (preliminary) is now above the slightly ascending 12-month moving average (72.0) for the 3rd consecutive month, after 5 consecutive months below. The current sentiment is above the ascending 24-month moving average of 70.4 for the 16th consecutive month. Current sentiment is above the mostly level 36-month moving average for the 7th consecutive month. (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 28 months of the Reuters/University of Michigan Index of Consumer Sentiment from November 2008 through the latest month reported, February 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, February 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 and February 2011 (preliminary) 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 75.1 (preliminary) for February rebounds from the disappointing January preliminary estimate of 72.1 (74.2 revised). This is an 8 month high. The Conference Board monthly Consumer Confidence Survey for January was also an 8 month high and is reviewed here [USA Consumer Confidence at 8-Month High! (Chart) *Consumers have begun the year in better spirits*]. Gallup is also reporting positive economic confidence on February 8, "Economic Optimism in U.S. Ties Three-Year High". 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 the month.

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