UPDATE: US Consumer Sentiment At Highest Level Since 2007
May 25 2012 - 12:16PM
Dow Jones News
U.S. consumers ended May feeling the most upbeat about the
economy since late 2007, according to data released Friday.
Respondents are paying attention to jobs, not Greece.
The Thomson Reuters/University of Michigan consumer sentiment
index increased to 79.3 in its final-May reading from 77.8 earlier
in the month and 76.4 at the end of April, according to an
economist who has seen the report.
Economists surveyed by Dow Jones Newswires had expected the
final May index to be unchanged at 77.8.
The current conditions index was little changed at 87.2 from the
preliminary reading of 87.3, while the expectations index increased
to 74.3 from 71.7.
The report said the index has improved in each of the past nine
monthly surveys. The May sentiment index is the highest since
October 2007, before the last recession.
The expectations index is at its highest level since July 2007,
and the current conditions index is the best since January
2008.
"Record numbers of consumers mentioned that they heard of
favorable employment trends despite the jobs slowdown recently
reported by the Labor Department," said the report. The next
payroll report, for May, is scheduled to be reported June 1.
U.S. consumers aren't paying much attention to talk about Greece
leaving the euro zone.
"One issue that only a few consumers even mentioned was the
potential impact on the domestic economy from the European
financial crisis," the report said.
With gasoline prices falling, consumers have lowered slightly
their price expectations.
Within the Michigan survey, the one-year inflation expectations
reading slowed to 3.0% in late May from 3.1% in early May and 3.2%
in late April. The inflation expectations covering the next five to
10 years fell to 2.7% from 3.0% in early May.
Economists at Nomura Securities point out the Federal Reserve
watches the longer-run inflation expectations data to gauge whether
consumers are anticipating more or less inflation. They write the
May slowdown "might give the Fed more leeway."
-By Kathleen Madigan, Dow Jones Newswires; 212-416-2466;
kathleen.madigan@dowjones.com