Ann Arbor, MI, December 22, 2006--Consumer sentiment slipped in December but was not far from the year's highs, according to the University of Michigan. The report suggests that Americans were guardedly optimistic about the economy in the holiday season.
The university said the final December reading of its consumer sentiment index declined to 91.7 from 92.1 in November. The drop was less severe than expected on Wall Street, where the median forecast called for a reading of 90.2.
A measure of current conditions edged up on the month to 108.1 from 106.0 in November, but expectations about the future deteriorated, to 81.2 from 83.2. Price expectations over a one-year period, an important guidepost for interest rate policy, dipped to 2.9 percent, its lowest since February 2005. That index was at 3.0 percent in November.
The data should provide further encouragement to the Federal Reserve that it may be able to start cutting interest rates sometime over the next two quarters, especially if incoming economic reports continue to show weakness.
