Friday, November 11, 2011

USA Consumer Sentiment Rebounds to 5-Month High! (Charts) "Americans felt better about the economic outlook"


USA Consumer Sentiment: Thomson Reuters/University of Michigan

Index of Consumer Sentiment (Reuters, November 11, 2011) U.S. consumer sentiment rose to its highest level in five months in early November as Americans felt better about the economic outlook, a survey released on Friday showed. The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment rose to 64.2 from 60.9 the month before, topping the median forecast of 61.5 among economists polled by Reuters. The survey's gauge of consumer expectations climbed to 56.2 from 51.8. While respondents were no more positive about the current state of the economy, they were less likely to expect it to worsen in the year ahead, the survey said. The survey's barometer of current economic conditions nudged up to 76.6 from 75.1. All three main indexes were at their highest level since June.

Commenting on the Survey Surveys of Consumers Chief Economist, Richard Curtin: "Overall, it is still likely that real consumer expenditures will not be strong enough during the year ahead to enable the higher rates of economic growth needed to offset the negative grip of income and job stagnation on consumer spending. Although improved, a renewed downturn in the economy still has an uncomfortably high probability of occurring."

Trend The Index of Consumer Sentiment increased +3.3 to a 5-month high. The short-term trend has reversed and is now increasing. The intermediate-term and long-term trends continue downwards.

Cycle History The current November 2011 Index of Consumer Sentiment of 64.2 (preliminary) is well above the recent August 2011 low of 55.7. The Great Recession low was 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 by Month Below is a multi-year chart of the Reuters/University of Michigan Index of Consumer Sentiment by Month through the latest month reported.

Consumer Sentiment Index by Year Below is a multi-year chart of the Reuters/University of Michigan Index of Consumer Sentiment by Year, adjusted 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 chart below smooths out these short-term ups and downs and provides an intermediate-term perspective by averaging the months in each year. The Pre-Great Recession peak was in 2007 at 85.6. The Great Recession low was 2008 at 63.8, which illustrates the sustained, lower sentiment. The Post-Great Recession peak has been 2010 at 71.8. The 2011 average of 67.2 is through the latest month reported.

Commentary The Reuters/University of Michigan Index of Consumer Sentiment at 64.2 (preliminary) in November 2011 is a 5-month high and above the recent August low of 55.7, which was the lowest since the Great Recession low of 55.3 in November 2008 and was also at 1980 recession levels. Consumers are not so gloomy, but sentiment continues at historically low levels. The index averaged 89 in the five years leading up to the Great Recession, that began Q3 2008 and ended in Q2 2009. The short-term trend has reversed and is now increasing, but the intermediate-term, long-term, and ultra long-term trends are decreasing.

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