In what may be good tidings for the holiday season, the Thomson Reuters/University of Michigan sentiment index lifted to its highest level in five months. The overall index, announced today, climbed from 60.9 last month to 64.2 in early November, a significant rebound from last August’s reading of 55.7.
The monthly Index is a survey of 500 households about their financial conditions and attitudes about the economy. Opinion about current editions edged up from 75.1 to 76.6, while consumer expectations for the next six months increased from 51.8 to 56.2. Both levels were the highest in seven months.
The Index has recovered only half of its decline from 77.5 in February, and is still below its long-term average of 86, the Financial Times reports.
To regain this ground, analysts say that unemployment needs to drop substantially from its current level of 9 percent, which the Fed now expects should hold for the rest of 2011.This is a revision of its June projections that unemployment would fall between 8.6 percent and 8.9 percent this year. The Fed similarly revised its unemployment projections upward for 2012 from 7.8-8.2 percent range to the 8.5-8.7 percent range.
Twenty-seven percent of respondents to the Index said they expect the jobless rate to rise, down from more than a third (34 percent) in October. This improvement is reflected in the nation’s jobless claims, which fell this week to 390,000, their lowest level in seven months.
Considering that consumer spending accounts for 70 percent of the economy, it is another positive sign that personal expenditures increased 2.4 percent in the third quarter, helping to boost the economy 2.5 percent.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.