Highlights of the Michigan Sentiment Index (MSI) for August

Highlights of the Michigan Sentiment Index (MSI) for August

Highlights of the Michigan Sentiment Index (MSI) for August

US consumer sentiment fell by less than expected in August on a positive outlook for the economy and a strong job market, a University of Michigan report showed Friday.

Highlights of Michigan Sentiment (August, Final)

  • Sentiment index decreased to a seven-month low of 96.2 (est. 95.5) from 97.9 in July; preliminary reading was 95.3, the survey said.
  • Current conditions gauge fell to 110.3, the lowest since November 2016, from 114.4 in prior month (prelim. 107.8)
  • Expectations measure decreased to 87.1 from 87.3 (prelim. 87.3)
  • Five years ago, the index was at 82.1.

Key Takeaways

A gauge of buying conditions for long-lasting goods decreased to the lowest since Y 2015 on rising prices and interest rates, the survey showed. At the same time, income expectations and job certainty have become the main reasons cited by consumers for positive views on spending.

Inflation expectations for the coming year matched the highest since Y 2014. They were higher for those who saw a negative impact from tariffs compared with respondents who didn’t mention levies, the survey showed.

Sentiment has been pulling back from loftier levels earlier this year amid trade tensions and rising inflation that’s eating away at Americans’ wallets. Nonetheless, a strong economy, record highs in the stock market and one of the best labor markets in decades are seen helping to support healthy consumer spending.

Personal finances remained “very favorable” as 55% of households cited recent financial gains and near record numbers mentioned improving household wealth, according to the survey.

Official’s View

“These results stand in sharp contrast to the recent very favorable report on growth in the national economy,” the director of the University of Michigan consumer survey, said in a statement. “The dominating weakness was related to less favorable assessments of buying conditions, mainly due to less favorable perceptions of market prices and to a lesser extent, rising interest rates.”

Other Details
  • Expected change in prices during the next year edged up to 3% from 2.9% in July
  • Inflation rate over next 5 to 10 years seen at 2.6%, up from 2.4% the month prior

Have a terrific holiday weekend

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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