The Reuter’s/University of Michigan’s consumer sentiment index has now been revised to a slightly lower level for October, but to a level that is still much better than trend over the prior months. In the first reading from two weeks ago, it was a shock to see that the report came in at 83.1. That figure has been revised slightly lower to 82.6.
The good news is that there can be no government conspiracy theories here about this reading. The bad news is that this economic barometer is one that should honestly be challenged over the number of surveys and the metrics.
October’s preliminary mid-month reading of 83.1 was up 4.8 points from September, much more than expected and the highest reading during the recovery.
As far as why we have an issue with this reading, the University of Michigan’s Consumer Survey Center questions only 500 households each month on their financial conditions and attitudes about the economy. Is that enough to survey? Consumer sentiment is directly related to the strength of consumer spending, which is why the report is looked at so closely. Our take is that the real sentiment reading is the consumer confidence report from the Conference Board.
JON C. OGG