6/26/2015
By Jennifer Coombs

Overall market optimism is much stronger in 2015 based on the University of Michigan’s Consumer Sentiment Index, which jumped well above consensus estimates for a final June reading of 96.1. This is well above the highest economist estimate of 95.2 and much stronger than the 94.6 mid-month flash estimate. The jobs market is looking much stronger thanks to a surge in the expectations component, which came in at 97.8 for a 12-year high and an 11-point jump from the mid-month readings and a 13.6-point surge from the final reading in May. This 13.6-point spread is the largest monthly gain in expectations since way back in March 1991. Current conditions also showed a strong move to 108.9 compared to 106.8 from the mid-month reading and a 100.8 final reading in May. This component was slightly higher in January, but the 8.1-point gain from May was the strongest gain in current conditions since December 2013. Gains in this component point to stronger consumer spending and jobs data over the May-to-June period. Another surprise was that this gain in the index is not triggering any inflationary expectations which, compared to the final reading in May, are lower for both the 1-year and 5-year outlooks at 2.7% and 2.6%, respectively. Although these are higher than the Fed’s 2.0% target, both readings are still very low for this report. Overall this report is fantastic, with other positive indications on the consumer sector, including jobless data and spending. According to this data, into the rest of 2015 the consumer should be earning more, spending more, and driving the economy higher.

Jennifer Coombs
Wall Street Strategies

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