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Instant view: Consumer sentiment strongest since June

NEW YORK (Reuters) - U.S. consumer sentiment rose to its highest level in six months in early December due to signs of better labor conditions and an improving outlook on the economy.

COMMENTS:

VASSILI SEREBRIAKOV, SENIOR CURRENCY STRATEGIST, AT WELLS FARGO, NEW YORK

"There's still along way to go before consumer confidence that would be compatible with strong consumer spending, with the index still below the levels seen in the first half of the year. But it's somewhat encouraging that confidence is improving and that adds to the list of positive U.S. data. The euro has rallied perhaps in response to the rally in the equity market and this data has added to that gain."

PETER JANKOVSKIS, CO-CHIEF INVESTMENT OFFICER AT OAKBROOK INVESTMENTS LLC IN LISLE, ILLINOIS

"The outlook for U.S. consumer sentiment makes a good deal of sense. We have certainly seen a pickup in U.S. economic data over the last two months. Jobs growth has been better than forecast in the last couple of reports, we have also seen unemployment claims going down, retail sales data better than expected generally."

PATRICK O'KEEFE, DIRECTOR OF ECONOMIC RESEARCH AT J.H. COHN IN NEW YORK

"That's a big jump from the prior month, and it does reflect what we've seen recently. What we're seeing is that households perceive the jobs market as somewhat more robust than what employers are reporting. That divergence is not uncommon, but it would support a higher level of optimism. It suggests a better outlook than other indicators have suggested."

DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS

"The preliminary December Michigan CSI reading of 67.7 exceeds not only November's 64.1, but also a market consensus of 65.5 and every monthly reading since June's 71.5. The improvement was due almost fully to expectations, which rose to 61.1 from 55.4, with current conditions seeing only a marginal gain to 77.9 from 77.6. The greater advance in expectations should be seen in the context that expectations got hit more in the recent period of weakness. Both components are at their highest since June, with expectations 3.7 points and current conditions 4.1 points below their June levels. Still, the rise in expectations relative to current conditions does go against what many economists are feeling about the economy, that is an upgrade to their Q4 2011 projections but continued worries about the 2012 outlook. That equities had recovered from their late November weakness by early December probably played a part in the latest bounce in expectations. The failure of the debt super committee, which most respondents in November had not yet been aware of, does not seem to have done any significant damage in December. It is likely few expected the debt super committee to achieve anything, while some may have been relieved that no entitlement cuts or tax increases emerged from the process. The University of Michigan does warn that consumers are still largely expecting the payroll tax cut of 2011 to be extended into 2012, and that failure to do so could have a negative impact."

LINDSEY PIEGZA, ECONOMIST, FTN FINANCIAL, NEW YORK

"The headline number is good. This is the improving trend that we've seen since August. But the underlying fundamentals of the economy have very little changed. We still have high unemployment, very tepid job growth. We still have the European debt crisis. The consumer is failing to focus on what's happening right now but projecting into the future and saying things have nowhere to go but up. It is the holiday season; we see people out in droves. When consumers are out doing what they do best - spending - we see it and it makes us happy."

(Americas Economics and Markets Desk)

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