Economists Surprised by Drop in Consumer Sentiment

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How about the threat of another government shutdown looming, unemployment is still around 7.3%, the Affordable Care Act is not what was promised and scandals and lies are rampant in all phases of the government. This article just shows how far out of touch a lot of the academia really are. For a more detailed look at this subject – please read the article below.

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The University of Michigan’s preliminary Index of Consumer Sentiment report shows a drop in confidence for November—and Capital Economics’ Amna Asaf is at a loss to explain why.

The index, released jointly by the University of Michigan and Thomson Reuters, fell from 73.2 to a two-year low of 72.0 in the first November report. With the economy in a relatively healthier position compared to last month, Asaf – an economist for the macroeconomics research firm—says the decline is something of a surprise.

“The further drop in the University of Michigan’s index of consumer confidence … is hard to explain given that the government reopened, the labor market is strengthening, equity markets have rallied and gasoline prices have fallen further,” she said.

The decline in November’s headline index came from a drop in the Current Conditions Index, which fell to a 10-month low of 87.2 from 89.9 at the end of October. That index typically reflects changes in job market conditions, which—given October’s strong increase in payrolls—makes the preliminary November figures all the more puzzling, Asaf said.

Meanwhile, the Index of Consumer Expectations, which reflects changes in equity and gas prices, registered 62.3, down slightly from 62.5. Gasoline prices are hovering at year-to-date lows, and mortgage rates have also leveled out at a five-month low of around 4.30 percent, Asaf noted.

To read the complete article – please use the link below.

Drop in Consumer Sentiment

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