Friday, September 17, 2010

Downward trend in consumer sentiment

Plenty of worries abound and the headwinds buffeting the economy are taking a toll on consumer sentiment, as evidenced by the latest survey from Thomson Reuters and the University of Michigan.

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One interesting and troubling stat in the survey.  The one-year inflation expectations measure fell to 2.2% from 2.7% August, the lowest reading since last September. Nearly a third of consumers surveyed expect deflation or a zero inflation rate during the year ahead, Reuters said.

The survey's five-to-10-year inflation outlook index was unchanged from August at 2.8%.

Modest inflation expectations, along with the shallow recovery, have played a major role in preventing the rate of inflation from falling to zero.  If short-term inflation expectations head lower, pressure will rise on retailers to hold the line on any price increase.

Details at Examiner.

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