Friday, July 15, 2011

USA Consumer Sentiment Plunges in July (Charts) *Lowest since the depths of March 2009*


Thomson Reuters/University of Michigan: USA Consumer Sentiment

(Reuters New York, Friday, July 15, 2011)  U.S. consumer confidence hit a near 2-1/2 year low in early July and manufacturing output stalled in June, further frustrating expectations of a quick economic growth rebound in the second half of the year. Worries about stubbornly high unemployment pushed the Thomson Reuters/University of Michigan's index of consumer sentiment to 63.8, the lowest since March 2009, a report showed on Friday. Economists had expected the index to climb to 72.5 from 71.5 in June.

Trend The short-term trend continues downwards with 2 consecutive monthly decreases. The intermediate-term trend (6-month moving average) continues downwards and the long-term trend (12-month moving average) continues downwards.

Cycle History Consumer Sentiment reached a Post-Great Recession peak of 77.5 in February 2011, just before oil prices spiked up. 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 June 2010 at 73.9. The 6-month moving average has dropped the past 2 months.

Commentary The Reuters/University of Michigan Index of Consumer Sentiment at 63.8 (preliminary) in July 2011 is a multi-year low and a "Lose Hope All Ye Who Enter" signal. Even the intermediate-term trend (6-month moving average is decreasing significantly). The July 2011 Index of 63.8 is the lowest since March 2009 (58.0) and those were dismal days indeed. Undoubtedly, not just high unemployment and high oil prices, but the bipartisan deadlock on the U.S. debt ceiling is having a tremendous negative impact. This bipartisan bickering also pushed down the Index in September and October 2010 before the mid-term Congressional elections, but not to this extent. USA consumer sentiment continues at historically low levels. The Reuters/University of Michigan Index of Consumer Sentiment will be revised later in the month from this preliminary reading.

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