Michigan Consumer Sentiment: Up From September Final

wall-street-etfJill Mislinski: The University of Michigan Preliminary Consumer Sentiment for October came in at 92.1, an increase from the 87.2 Final September reading. Investing.com had forecast 79.0 for the October Preliminary.

Surveys of Consumers chief economist, Richard Curtin makes the following comments:

The rebound in confidence signifies that consumers have concluded that the fears expressed on Wall Street did not extend to Main Street. Importantly, the renewed confidence did not simply represent a relief rally, but instead reflected renewed optimism. Personal financial expectations rose to their highest level since 2007, as did consumers’ views toward purchases of durable goods. While consumers anticipate a continued economic expansion, many expected strong headwinds from falling commodity prices, weakened economies in China and elsewhere as well as continued stresses on European countries. Perhaps the most important finding is that low inflation and continued job growth have enabled consumers to adapt to a slower and more variable rate of economic growth by varying the pace of their spending without losing confidence that the expansion will continue. Overall, the data still indicate that consumption will expand at 2.9% during 2016. [More…]

See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.

Michigan Consumer Sentiment

To put today’s report into the larger historical context since its beginning in 1978, consumer sentiment is 8 percent above the average reading (arithmetic mean) and 9 percent above the geometric mean. The current index level is at the 65th percentile of the 454 monthly data points in this series.

The Michigan average since its inception is 85.3. During non-recessionary years the average is 87.5. The average during the five recessions is 69.3. So the latest sentiment number puts us 22.8 points above the average recession mindset and 4.6 points below the non-recession average.

Note that this indicator is somewhat volatile, with a 3.1 point absolute average monthly change. The latest data point was a 4.9 point change from the previous month. For a visual sense of the volatility, here is a chart with the monthly data and a three-month moving average.

3-Month Moving Average

For the sake of comparison, here is a chart of the Conference Board’s Consumer Confidence Index (monthly update here).

(…)Click here to continue reading the original ETFDailyNews.com article: Michigan Consumer Sentiment: Up From September Final
You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)