The University of Michigan Consumer Sentiment preliminary number for December came in at 82.5. Today's number is well above the Investing.com forecast of 76.0 and a massive 7.4 point gain over the November final reading of 75.1. Today's level is 2.6 points below the interim high in July and 8.0 points above the preliminary reading for December a year ago.
See the chart below for a long-term perspective on this widely watched index. I've highlighted recessions and included real GDP to help evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.
(click to enlarge)
To put today's report into the larger historical context since its beginning in 1978, consumer sentiment is now only 3 percent below the average reading (arithmetic mean) and 2 percent below the geometric mean. The current index level is at the 39th percentile of the 432 monthly data points in this series.
US personal consumption spending for October is projected to rise 0.3% vs. the previous month in tomorrow’s update from the Bureau of Economic Analysis, based on The Capital Spectator's average econometric forecast. Today’s average projection is slightly above the previously reported 0.2% increase for September. Meanwhile, the Capital Spectator’s average 0.3% forecast for October matches the projections in three surveys of economists.
Here's a closer look at the numbers, followed by brief summaries of the methodologies behind The Capital Spectator's estimates:
VAR-1: A vector autoregression model that analyzes the history of personal income in context with personal consumption expenditures. The forecasts are run in R with the "vars" package.
VAR-3: A vector autoregression model that analyzes three economic time series in context with personal consumption expenditures. The three additional series: US private payrolls, personal income, and industrial production. The forecasts