EmailEconomic
Last Update: 24-May-12 18:26 ET
Mich Sentiment
Highlights
- The preliminary reading of the May University of Michigan Consumer Sentiment index increased from 76.4 in April to 77.8. That is the strongest reading since December 2007. The Briefing.com consensus expected the index to fall to 76.0
Key Factors
- Normally, consumer sentiment follows trends in oil/gasoline prices, employment, stock market growth, and media developments. The strong gain in May verifies that consumers are not concerned that the lackluster improvement in the employment sector or the softening in equity prices are signs of inherent weakness in the overall U.S. economic recovery.
- The present conditions index rose from 82.8 in April to 87.3 in May. The expectations Index declined from 72.3 in April to 71.7 in May.
- The pickup in sentiment this month does not guaranty a similar gain in spending. Consumption growth follows income gains, not sentiment readings. As long as employment levels continue to expand, consumption growth should remain on an upward track.
Big Picture
- Income growth is still the most important driver of consumer spending, although rising levels of consumer sentiment are a positive on the margin for consumer spending activity.
| Category | MAY | APR | MAR | FEB | JAN |
|---|---|---|---|---|---|
| Sentiment | 77.8 | 76.4 | 76.2 | 75.3 | 75.0 |
| Outlook | 71.7 | 72.3 | 69.8 | 70.3 | 69.1 |
| Present conditions | 87.3 | 82.8 | 86.2 | 83.1 | 84.2 |
