Results of the University of Michigan's consumer sentiment survey were
as strong as was discussed on trading desks before the official release.
The index is at its highest level since January 2004, and the current level
is its second highest since 2000, when the index hovered between 105 and
112, which was the all-time high set in January 2000. While the decline in
energy costs and the recent low level of jobless claims probably played a
role, the rebound might reflect the recent strength of the stock market, as
this has been the main different between the consumer metrics seen today
versus 2000.
Whether the jump reflects an income effect--i.e. a pickup in job
growth -- will become clearer after the release of the Conference Board's
consumer confidence index on Jan. 30.
The Conference Board's survey
has the best correlation to job conditions because two of its five survey
questions relate directly to the labor market. None of the UOM's survey
questions relate specifically to the job market, hence rendering the survey
vulnerable to the emotional whims of consumers.
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Tony Crescenzi Blog Now We Have Rate-Hike Odds 1/18/2007 1:47 PM EST The shift follows months of steady erosion in perceptions about the chances of a rate cut.
Tony Crescenzi Blog Philly Fed Shows Pickup in Factory Activity 1/18/2007 12:32 PM EST A rebound is seen following weakness that began in the summer, partly in response to auto-inventory adjustments.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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