Monday, May 16, 2011

USA Consumer Sentiment Rises in May (Charts) "Mood improves on job optimism"


Thomson Reuters/University of Michigan: USA Consumer Sentiment

(Reuters New York, Friday, May 13, 2011)  U.S. consumer sentiment improved in early May as optimism about jobs reduced the pinch from high gasoline and food prices, a survey released on Friday showed. But the brighter employment picture did not erase consumers' gloom about the outlook for their personal finances and their caution on spending. The Thomson Reuters/University of Michigan's survey of consumers showed the preliminary May reading on the overall index came in at 72.4, its highest since February, up from 69.8 in April.

Trend The short-term trend is upwards with 2 consecutive monthly increases. The intermediate-term trend (6 months) is slightly upwards and the long-term trend (12 months) is downwards.

Cycle History Consumer Sentiment reached a Post-Great Recession peak of 77.5 in February 2011. A Great Recession cyclical and all-time low of 55.3 was set in November 2008. A Pre-Great Recession peak of 96.9 was reached in January 2007. In 2004 the index was greater than 100.

Consumer Sentiment Index (Chart) Below is a chart of the Reuters/University of Michigan Index of Consumer Sentiment from November 2008 through the latest month reported. November 2008 was the Great Recession and all-time low 55.3.

Consumer Sentiment 6-Month Moving Average (Chart) Below is a chart of the Reuters/University of Michigan Index of Consumer Sentiment 6-Month Moving Average from May 2007 through the latest month reported. 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 and their own individual prospects. Therefore, the 6-month moving average chart smooths out these short-term ups and downs and provides an intermediate-term perspective. The Pre-Great Recession peak was in May 2007 at 90.6 while the Great Recession low was in March 2009 at 58.0. The Post-Great Recession peak has been in February 2011 at 77.5. The 6-month moving average leveled off recently and is now slightly increasing.

Commentary The Reuters/University of Michigan Index of Consumer Sentiment at 72.4 (preliminary) in May was a 2nd consecutive large monthly increase, after the plunge in March due to higher gas prices and general world turmoil. However, as noted by many economists, even with this May increase, USA consumer sentiment is at a low level. The Reuters/University of Michigan Index of Consumer Sentiment will be revised later in the month from this preliminary reading.

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