Econoday Report: Consumer Sentiment 23, 2005

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Consumer Sentiment

Definition
The University of Michigan's Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending. Consumer confidence and consumer sentiment are two ways of talking about consumer attitudes. Among economic reports, consumer sentiment refers to the Michigan survey while consumer confidence refers to The Conference Board's survey. Why Investors Care

Released on 12/23/05 For Dec 2005

Sentiment Index, Level
Actual	91.5
Consensus	89.5
Consensus Range	88.7 to 92.0
Previous	74.2

Highlights
The University of Michigan's consumer sentiment index jumped just about 10 points in December to 91.5 from November's level of 81.6. The final December reading was also up several points from the mid-month reading of 88.7 and was stronger than the market consensus. This could be viewed in a friendly light by equity investors who are hoping for a strong holiday selling season, although most analysts believe that last weekend was the peak selling weekend and that today's and tomorrow's sales will not be particularly robust.

The current conditions index jumped to 109.1 in December from November's level of 100.2 and the expectations index rose sharply to 80.2 from 69.6 in November. The improvement in consumer sentiment is largely due to the softening of gasoline prices lately.

Market Consensus Before Announcement
At the mid-December reading, the University of Michigan's consumer sentiment index increased about seven points, rising to 88.7. No doubt, consumers are feeling more optimistic now that gasoline prices have declined from their highs.

Consumer sentiment Consensus Forecast for Dec 05: 89.5
Range: 88.7 to 92

Trends

Consumer sentiment is mainly affected by inflation and employment conditions. However, consumers are also impacted by current events such as bear & bull markets, geopolitical events such as war and terrorist attacks. Investors monitor consumer sentiment because it tends to have an impact on consumer spending over the long run (although not necessarily on a monthly basis.)

Data Source: Haver Analytics

2005 Release Schedule

Released On: 2/4 3/4 4/1 4/29 5/27 7/1 7/29 8/26 9/30 10/28 11/23 12/23

Released For: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec