Econoday Economic Report: Consumer Sentiment February 13, 2009

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Consumer Sentiment

Released On 2/13/2009 9:55:00 AM For February, 2009

	Prior	Consensus	Consensus Range	Actual
Sentiment Index - Level	61.2	61.0	56.5 to 64.0	56.2

Highlights
Consumer spirits are breaking down to new lows, the results of the Reuters/University of Michigan consumer sentiment index which dropped 5 points at mid-month to 56.2 vs. January's 61.2. Expectations, the leading component of the index, dropped to 49.1 for a nearly 9 point loss, a sizable loss that points to a run of disappointment ahead.

One-year inflation expectations suddenly eased as they did in December, down 6 tenths to 1.6 percent. Less expensive gas prices, under $2 in most areas, may be one reason for the decline. But another reason may be a widening outlook that the economy looks to be weak for some time to come. There was no significant reaction to the report, at least initially.

Market Consensus before announcement
The Reuter's/University of Michigan's Consumer sentiment index was little changed in January at severely depressed levels, at 61.2 and compared to a December reading of 60.1. Both the assessment of expectations and the assessment of current conditions, the two components of the headline index, were little changed. The bottom line is that consumers are extremely worried about current and near-term economic conditions - notably the job market. We need to see an improvement in consumer sentiment so consumers would be more willing to spend and boost the economy.

Consumer sentiment Consensus Forecast for preliminary February 09: 61.0
Range: 56.5 to 64.0

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. Preliminary estimates for a month are released at mid-month. Final estimates for a month are released near the end of the month. Why Investors Care

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.)

2009 Release Schedule

Released On: 1/16 1/30 2/13 2/27 3/13 3/27 4/17 5/1 5/15 5/29 6/12 6/26 7/10 7/24 8/14

Release For: Jan Jan Feb Feb Mar Mar Apr Apr May May Jun Jun Jul Jul Aug

Released On: 8/28 9/11 9/25 10/16 10/30 11/13 11/25 12/11 12/23

Release For: Aug Sep Sep Oct Oct Nov Nov Dec Dec