Consumer Sentiment: Final Result for October 2016

The Consumer Sentiment (Final Result) reading for October 2016 was released today:

Predicted: 88.5
Actual: 87.2

• Change from Last Month: -4.386%

• Change from 12 Months Ago: -3.111%

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From today's report:

"...The Sentiment Index slipped in October to the same low recorded last September and to the lowest level since October 2014. The October decline was due to less favorable prospects for the national economy, with half of all consumers anticipating an economic downturn sometime in the next five years for the first time since October 2014. Objectively, the probability of a downturn during the next five years is far from zero-this would be the longest expansion in 150 years if it lasted just over half of the five year horizon. Nonetheless, the October rise may simply reflect a temporary bout of uncertainty caused by the election. Prospects for renewed spending gains will depend on continued growth in jobs and wages as well as low inflation and interest rates. The small rise in interest rates now expected in December will have a minimal impact on spending. Along with small increases in interest rates, consumers also anticipate a mild slowdown in job creation that is likely to prevent any further declines in the national unemployment rate. To be sure, these changes are all anticipated to be small during the year ahead. Overall, real personal consumption expenditures can be expected to increase by 2.5% through mid 2017..."

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The Consumer Sentiment Index is compiled on a monthly basis by the University of Michigan; 500 U.S. households are queried about their own financial circumstances and about the economy in general. 200 questions are asked, e.g. "Do you think that right now is a good time to purchase a major household item, like a new microwave oven, TV set, or a new sofa?"

The Consumer Sentiment Index uses a 1966 baseline, i.e. for 1966, the Consumer Sentiment Index = 100. So any number that is below the 1966 baseline of 100 means that the folks who were polled recently aren't as optimistic about the U.S. economy as the sample that was polled back in 1966.

The Consumer Sentiment Index is similar to the Consumer Confidence Index in that they both measure consumer attitudes and offer insight into consumer spending.

The "predicted" figure is what economists were expecting, while the "actual" is the true or real figure.

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Last month's Consumer Sentiment reading was 91.2.

Click here to view the full University of Michigan report.

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