Tuesday, August 19, 2008

Consumer sentiment: a Bear Market

What is consumer sentiment?

'Consumer sentiment' is an index of survey data used to statistically represent the thoughts, feelings, and attitudes that consumers hold toward their economic environment. A higher number means higher confidence and a low number means lower confidence.

Consumer thought and feeling, as measured here by the University of Michigan, is approaching its lowest levels in the thirty year history of the data. However, the most recent reading did find a statistical uptick, from 56.4 in June to 61.2 in July.

Even so, consumer sentiment is off by almost forty percent from its most recent high. In January of 2007 consumer sentiment was measured as '96.9.' In July of 2008 the measure was '61.2,' a drop of '37%.' That's what Wall Street investors would call a 'bear market.'

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