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Michigan Sentiment Indicator Enters 'Recession Zone'

US
  • In the past two years, US confidence indicators have not followed the strong recovery in equities and continue to remain at depressed levels.
  • We saw that (preliminary) US Michigan confidence index dropped to a to a 10Y low of 61.7 in February, entering the 'recession zone'.
  • US sentiment indicators are now pricing in a significant deceleration in real consumption in the coming months, which is going to weigh on growth expectations (as consumption represents 70% of the economy).
  • The chart below shows the strong co-movement between Michigan confidence indicator and US real PCE in the past 50 years.

Source: Bloomberg/MNI.

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