August Mich Sentiment

Updated 27-Aug-10 10:28 ET

Highlights

According to final reading of the University of Michigan Consumer Sentiment Index in August, consumer sentiment softened slightly from the preliminary reading as the index fell from 69.6 to 68.9.
The Briefing.com consensus called for the index to increase to 70.0.

The drop was due to increased worries regarding the future as the economic outlook index fell from 64.1 to 62.9. This is still slightly higher than the final 62.3 reading in July.
The current economic conditions index remained at 78.3.
Given the tight correlations between the outlook index and the number of negative economic media reports, the increased chatter regarding a possible double-dip recession was probably at fault for the drop in sentiment.
Sentiment indicators, however, are notoriously poor at forecasting consumption trends. The drop in the final reading will not affect our growth forecasts.

Sentiment readings are a reflection of a variety of events rather than an accurate tool for forecasting consumer spending. Gas prices and political events can have an outsized impact on sentiment. In general, these data are of very little economic value.

Category	AUG	JUL	JUN	MAY	APR
Sentiment	68.9	67.8	76.0	73.6	72.2
Outlook	62.9	62.3	69.8	68.8	66.5
Present conditions	78.3	76.5	85.6	81.0	81.0