Consumer Sentiment Ticks Up

Consumer sentiment picked up in the advance estimate of the University of Michigan Consumer Sentiment Index released today.  While the index is still hovering near recession lows the pick up in sentiment by consumers is encouraging.  As the market rebounded in October and some of the domestic economic stresses subsided attitudes began to improve after falling back to recession lows this summer.

While the index is certainly a very long way from getting back to levels that would considered "healthy" the improvement, which feeds into the Leading Economic Index, signals that at least for the moment the consumer is hanging in there.  However, it is important to keep focused on the bigger picture as this index can, and has in the past, reverse course sharply.

The advance estimate for December showed an increase of 3.6 points to 67.7 led by a strong 5.7 point jump to 61.1 in the leading component of expectations. The gain in expectations suggests that consumers see improvement for their job prospects and for their income prospects, keys for acceleration in consumer spending.  The one thing to keep in mind here is that the consumers "expectations" are based on past history.  Job numbers have improved lately which lead to stronger expectations by the consumer that their job prospects will improve in the future.   However, as we showed yesterday , the underlying job environment is much worse than the headlines state.

The consumer's assessment of current conditions showed very little improvement coming in at ...