US Consumer Indicators

Thomson Reuters/University of Michigan final index of consumer sentiment fell to 63.7, the weakest since March 2009, from 71.5 in June. The Michigan survey’s index of current conditions, which reflects Americans’ perceptions of their financial situation and whether it is a good time to buy big-ticket items like cars, decreased to 75.8 from 82.0 the prior month. The index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, dropped to 56.0 from 64.8.

The Conference Board Consumer Confidence Index, which had declined in June, improved slightly in July. The index now stands at 59.5 (1985=100), up from 57.6 in June. The Present Situation Index decreased to 35.7 from 36.6. The Expectations Index rose to 75.4 from 71.6 in June. There was certainly plenty of bad news during July that explains why consumers were so depressed.

While Q2 corporate profits have been very strong, the markets have focused on all the weak macroeconomic news. It’s hard to find much good news among the pile of bad macro news, as discussed in today’s Morning Briefing. Until yesterday, all we had was the drop in initial unemployment claims below 400,000 during the last week of July. This morning, we have July’s motor vehicle sales, which rose to 12.2 million units (saar) from 11.5 million units during June.

The gain was led by light-truck sales, which increased from 5.9 million units in June to 6.5 million units in July, back at February’s pace, which was the best since the summer of 2008. Overall sales should continue to improve as the shortage of imported models is relieved in coming months. The share of imports in total sales dropped to 22.4% during July, the lowest since March 2006.