Friday, January 19, 2007

Consumer Confidence Surges to 36-month High

- Preliminary Univ. of Mich. Consumer Confidence for January rose to 98.0 versus estimates of 92.2 and a reading of 91.7 in December.
BOTTOM LINE: American consumers gained confidence in January, boosting sentiment to the highest level since January 2004, as falling energy prices and steady wage gains made them feel better, Bloomberg said. The Expectations component of the index rose to 88.7, the highest since December 2004, versus 81.2 the prior month. The Current Conditions component, which is a gauge of Americans’ perceptions of their financial situation and whether or not it’s a good time to buy big-ticket items, surged to 112.5 from 108.1 the prior month. The average price of a gallon of gas was $2.20 on Jan. 17, 13 cents lower than at the end of December. Gas is 28% lower than last year’s high of $3.04/gallon in August. I continue to believe every measure of consumer sentiment will make new cycle highs over the coming months as energy prices fall further, long-term rates remain low, inflation decelerates further, wages continue to outpace inflation, stocks rise more, housing stabilizes at high levels and the job market remains healthy.

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