UoM Consumer Confidence fell sharply in Dec to 74.5 from 82.7 in Nov and below expectations of 82. It’s a 4 month low and is down from the highest level since Sept ’07. Most of the drop came in the Outlook component which fell by 13 pts to the lowest of the year while Current Conditions were down just .8 pts. Also of note, notwithstanding a 5 month low in the avg gallon of gasoline, one year inflation expectations rose to 3.3% from 3.1%, matching the highest since Aug. Five yr inflation expectations rose to 2.9% from 2.8%. Bottom line, confidence is now below the average ytd of 76.7. While its just one measure of consumer sentiment, maybe the constant barrage of back and forth in DC with no resolution yet is having an impact. In terms of the markets response to confidence data, its typically very limited as how one feels doesn’t always correlate to how they behave.

Category: MacroNotes, Think Tank

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2 Responses to “Confidence falls sharply, DC patience thin?”

  1. Theravadin says:

    I’m curious how good the UofM actually is, as a forward indicator of economic activity (let’s say GDP). So far, all the articles I’ve been seeing say “not very”… that it’s actually more of a backward indicator… but I may be missing something. Sometimes I get the feeling that many of these indexes, etc., are more or less tea leaves, and that paying attention to them doesn’t help much, except possibly as a measure of likely short term herd movement in the market.

  2. Mike S says:

    I don’t understand this, because the tax data is picking up, and self-reported consumer spending is ticking up too.

    http://monetaryrealism.com/booming-jobs-and-consumer-spending/

    It seems like these data points do not fit together very well. Something is wrong.