Today’s release of the Reuters/University of Michigan Survey of Consumers for December confirmed again that the U.S. consumer is feeling the burn from declining home values, increased fuel costs and a general uncertainty about the future of the economy.In fact, short of a brief plunge in the wake of Hurricane Katrina, the current levels for the Index of Consumer Sentiment and the Index of Consumer Expectations are at lows not seen since the early 1990’s.
The Index of Consumer Sentiment fell 17.67% as compared to December 2006 mostly as a result of consumers’ expectations of future economic prospects.
The Index of Consumer Expectations (a component of the Index of Leading Economic Indicators) fell a whopping 19.21% below the result seen in December 2006.
As for the current circumstances, the Current Economic Conditions Index fell 15.82% as compared to the result seen in December 2006.
As you can see from the chart below (click for larger), the consumer sentiment data is a pretty good indicator of recessions leaving the recent declines possibly foretelling rough times ahead.
