I once built a model based on this Michigan Consumer Expectations number, along other numbers. It worked fine. It is a gargage number, of course: based on phone-interviewed 500 households or something. And these preliminary numbers are usually based on about half of the interviewees.
Sabri +++++++ U.S. Consumer Confidence Index Falls to 12-Month Low (Update1) By Courtney Schlisserman Aug. 17 (Bloomberg) -- Confidence among U.S. consumers dropped in August to the lowest level in a year as slumping stocks and widening credit crunch added to their worries about weakness in the housing market. The Reuters/University of Michigan preliminary index of consumer sentiment fell to 83.3, a bigger drop than forecast and the lowest reading since August 2006, from 90.4 a month earlier. A measure of expectations also declined. Americans turned their attention to the plunge in U.S. stock markets even as a decline in gasoline prices eased a primary worry from recent months. Spending in coming months depends on whether markets recover and the outlook for hiring remains strong, economists said. ``Households have noticed what's going on and if the situation does not stabilize and improve there most likely will be some influence on consumer spending,'' said Michael Moran, chief economist at Daiwa Securities America Inc. in New York, Today's report ``suggests that the market movement is not just a Wall Street issue, it's also a mainstream issue.'' Economists forecast the confidence measure would fall to 88, according to the median of 60 projections in a Bloomberg News survey. Estimates ranged from 83 from 92.5. The August reading compares with an average 89 for the 12 months through July. The group's measure of expectations, which some economists view as a proxy of future consumer spending, fell to 74.1, the lowest since July 2006, from 81.5 in July. The gauge of current conditions, which reflects Americans' perceptions of their financial situation and whether it's a good time to buy big- ticket items like cars, decreased to 97.7 from 104.5. Early Gauge Today's report is among the first to measure consumers' outlooks since U.S. stocks began to plunge at the end of July as concern grew that stricter lending requirements would leave companies without the wherewithal to expand and may spur debt defaults. Most of last month's responses in the University of Michigan survey were collected before the market rout. Before today, the Standard & Poor's 500 Index had fallen 8.9 percent since mid-July. Stocks rallied today after the Federal Reserve unexpectedly cut the discount rate and said it's prepared to take further action to ``mitigate'' damage to the economy. The central bank reduced the rate at which the Fed makes direct loans to banks by 0.5 percentage point to 5.75 percent. Policy makers kept their benchmark federal funds rate target unchanged at 5.25 percent. Today's action is the first reduction in borrowing costs between scheduled meetings of the Federal Open Market Committee since 2001 and Ben S. Bernanke's first as Fed chairman. Demand for Cash Today's move came after the Fed and other central banks added funds into money markets late last week and early this week in an effort to meet rising demand for cash. Economists surveyed by Bloomberg News earlier this month said U.S. growth will be less than previously forecast because the rout in subprime borrowing would hamper consumer spending. Growth will slow to an average 2.6 percent annual pace in the second half of the year, 0.2 percentage point less than economists forecasts in July. The Bloomberg News survey showed consumer spending, which accounts for more than two-thirds of the economy, will probably grow at an average 2.5 percent the last six months of this year, a 10th of a percentage point less than forecast in July. Spending expanded at an average 3.7 percent rate per quarter over the last decade. Retailers' Earnings Wal-Mart Stores Inc. and Home Depot Inc., the two largest U.S. retailers, said on Aug. 14 that the housing slump, rising mortgage defaults and high energy prices will depress earnings this year. Wal-Mart forecast annual profit of as much as $3.13 a share, less than analysts estimated. Home Depot reiterated a production that per-share earnings will fall as much as 15 percent. ``U.S. consumers continue to be under difficult pressure economically,'' Wal-Mart Chief Executive Officer H. Lee Scott said on a recorded call. ``It is no secret that many customers are running out of money toward the end of the month.'' Cheaper gasoline may provide some encouragement for consumers. Prices have fallen every day since July 14, with the average price of regular gasoline at the pump declining to $2.762 a gallon on Aug. 15, the lowest since April 10, according to AAA. Consumers in the Michigan survey saw an improved outlook for inflation. They forecast an inflation rate of 3.2 percent in one year, compared with the 3.4 percent forecast in July. Inflation probably will run 2.9 percent over the next five years, compared with a projection of 3.1 percent in last month's survey. To contact the reporter on this story: Courtney Schlisserman in Washington [EMAIL PROTECTED] Last Updated: August 17, 2007 10:29 EDT ____________________________________________________________________________________ Need a vacation? Get great deals to amazing places on Yahoo! Travel. http://travel.yahoo.com/
