Weak Consumer Sentiment Reading Drags on Economy

shoppingThe market has a nearly live reading on consumer sentiment and confidence. The Reuters/University of Michigan reading on consumer sentiment is out. This is a preliminary reading for the month of May rather than backwards looking readings for April or March. While this is a preliminary reading that will be adjusted, and it is from a smaller pool of respondents than we think it should be, this is a potentially market-moving report.

Sentiment in mid-May came in at 81.8, down from last month's 84.1 reading. Bloomberg had a consensus estimate of 84.5, with a range of 82.5 to 88.0. In short, this was under all expectations. If we want to put this in perspective for prior reports, March's sentiment reading was down at 80.

For an index breakdown, the Current Index was 95.1 but the Expectations Index was down at 73.2. This signals that consumers feel fine today but are worried about the months ahead.

The 12-month inflation forecast is for inflation to be +3.2%, and, the five-year inflation forecast was shown to be +2.8%. This matters as the Federal Reserve's inflation target is set at 2.0% to 2.5%.

Stocks remain in the red, but with -18 on the DJIA and -4 on the S&P 500, the day's outcome is far from set by this number.

Filed under: Economy
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