Consumer Sentiment Remains at a Two-Year High
Washington, DC, February 2, 2007-- Consumer sentiment weakened in late January, according to research at the University of Michigan on Friday. The University of Michigan consumer sentiment index fell to 96.9 points in late January from 98.0 earlier in the month.
The drop was unexpected. Economists were expecting the index to hold steady at 98.0.The index is well above the 91.7 level in December. The index is still at its highest level in two years. Lower gas prices and a stronger labor market pushed confidence higher in the new year, researchers said.
"A stronger economy due to lower energy prices was anticipated by consumers to result in more jobs and higher wages during the year ahead," said Richard Curtin, the director of the survey.
The current-conditions index fell to 111.3 points in late January from 112.5 earlier in the month. This is up from 108.1 in December. The expectations index fell to 87.6 in late January. The index is still above December's level of 81.2.
Despite lower gasoline prices, consumers still reported that they expect a persistently high core rate of inflation, according to the report. Consumers' views of home buying improved, but buying plans remained at low levels.
"Although consumers now think the worst of the declines in the housing market are over, few consumers anticipate a quick revival in prices," Curtin said.
Economists caution that the consumer sentiment index does not necessarily predict consumer behavior. However, the expectations index is one of 10 indicators that make up the index of leading economic indicators