Sunday, September 18, 2011

USA Consumer Sentiment Continues at Recession Levels! (Charts) *Gloomy outlook lowest since 2008 and 1980*


Thomson Reuters/University of Michigan
USA Consumer Sentiment

Index of Consumer Sentiment, University of Michigan, Ann Arbor (September 16, 2011) Consumer sentiment in the United States rose in early September, but Americans remained very gloomy about the future with their expectations for the economy falling to the lowest level since 1980. The Thomson Reuters/University of Michigan's survey showed consumer sentiment edged up to 57.8 from 55.7 in August, creeping back up after a nearly three-year low last month and stronger than economists' expectations. Even so, the expectations gauge in the preliminary survey inched lower, and three out of four consumers expected bad times for the economy in the year ahead.

Commenting on the Survey Surveys of Consumers Chief Economist, Richard Curtin: “"Consumers are going to be very hesitant to spend with such negative views of their personal finances.”

Trend The Index of Consumer Sentiment increased +2.1 after 3 consecutive monthly decreases in June, July, and August of -2.8, -7.8, and -8.0, respectively. Therefore, the short-term trend, intermediate-term trend, and the long-term trend continue downwards.

Cycle History The current September 2011 Index of Consumer Sentiment is 57.8 (preliminary) and is just above the Great Recession low of 55.3 in November 2008. Consumer sentiment reached a Post-Great Recession peak of 77.5 in February 2011, just before oil prices spiked up. February 2011 was also the peak of several other economic indicators for the USA. 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 multi-year chart of the Reuters/University of Michigan Index of Consumer Sentiment through the latest month reported.

Consumer Sentiment 6-Month Moving Average (Chart) Below is a multi-year chart of the Reuters/University of Michigan Index of Consumer Sentiment 6-Month Moving Average 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 and the recent peak has been 73.0 in May 2011. The 6-month moving average has dropped the past 4 months.

Commentary The Reuters/University of Michigan Index of Consumer Sentiment at 57.8 in September 2011 is the lowest since the Great Recession low of 55.3 in November 2008 and also at 1980 recession levels. This is recession level, very gloomy sentiment. "The consumer is still very frustrated with virtually everything - 9 percent unemployment, still very tepid jobs creation and heightened job destruction," said Lindsey Piegza, economist at FTN Financial in New York. Not only the short-term trend is decreasing, but even the intermediate-term, long-term, and ultra long-term trends are decreasing.

The prior month August 2011 Index of 55.7 was the lowest since November 2008 (55.3), a 2+ year low, and those were dismal days indeed. Now the September 2011 consumer sentiment has continues near these low levels. High unemployment, high oil prices, and stagnant wages pushed sentiment down, but the bipartisan deadlock on the U.S. debt ceiling had a devastating, negative impact. In addition, Standard and Poor's downgraded the United States sovereign debt credit rating on August 5 from AAA to AA+. 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 has continued at historically low levels since 2007.

50-50 chance U.S. will fall back into recession: UMich Poll, Thomson Reuters: Reuters Insider

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Data Courtesy of Reuters/University of Michigan

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