Briefing.com: Mich Sentiment

Updated: 12-Mar-10 10:37 ET

March Mich Sentiment

Updated: 12-Mar-10 10:37 ET

Highlights

The preliminary reading of the University of Michigan Consumer Sentiment Index slipped from 73.6 in February to 72.5 in March.
The consensus expected the index to increase to 74.0.

Key Factors

In a somewhat surprising move, the current economic conditions index fell from 81.8 to 80.8. This was the first downward move in the index since November. Given the growing strength in the labor market, it was expected that the index would at least maintain its previous level. One possible explanation for the decline was the 3.9% increase in gasoline prices over the past few weeks. Typically, an increase in gasoline prices would have a negative effect on consumer sentiment.
The economic outlook index fell for the second consecutive month, dropping from 68.4 in February to 67.2 in March. While there are no details that explain the decline, consumers may be getting worried about future tax increases as state and federal deficits balloon in 2010.
Please note: Movements in the consumer confidence index play no role in predicting consumption growth.

Big Picture

Sentiment readings are a reflection of a variety of events rather than an accurate tool for forecasting consumer spending. Gas prices and political events can have an outsized impact on sentiment. In general, these data are of very little economic value.