Courtesy of Doug Short
With all the other releases on Friday, especially the 3-year revised GDP, I’m a bit late in updating my monthly Michigan Sentiment chart.
The University of Michigan Consumer Sentiment Index for July is 67.8, down significantly from the June reading of 76.0. The survey’s chief economist, Richard Curtin, summarizes:
Scarce jobs and stagnating incomes have been the top concerns of consumers for some time. What changed in July was their recognition that the anticipated slowdown in the economy will keep jobs scarce for some time, while their uncertainties about future prospects were increased by the policies of the Obama administration. Rather than itching to resume old spending habits, consumers have begun to actively embrace a more defensive outlook, making them more likely to further pare their debt and increase saving and reserve funds. This new defensive posture could result in even slower economic growth and fewer jobs in the future.
See the full release in PDF format here.
Because the sentiment index has trended upward since its inception in 1978, I’ve added a liner regression to help understand the pattern of reversion to the trend. I’ve also highlighted recessions to help evaluate the value of the Michigan Consumer Confidence Index as a leading indicator of the economy.
Note: The Real GDP numbers include the Second Quarter and are now updated with the BEA’s revised estimates from 2007 through First Quarter 2010.
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