U of Michigan Confidence

The preliminary May U of Michigan confidence # was a touch higher than
expected at 67.9 and up from 65.1 in April. It’s now at the highest
level since Sept ’08 when it reached 70.3 before falling to 55.3 in Nov.
The survey is done via phone just within the last few days so it is
timely and I’m sure with the SPX around the 900 level and the banking
system somewhat stable in the post stress test world, they contributed
to the improvement. BUT, a gain was seen only in the Outlook component
(optimism reigns for the two factors I cited) as it rose 6 pts to the
highest level since Oct ’07. Current conditions, which measures how
people fell right now, fell 2 pts. One year inflation expectations fell
to 2.6% from 2.8% in April, notwithstanding the 22% rise in gasoline
prices since the end of April and 10%+ gain in many of the grains which
likely has showed up yet in retail prices.

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