Ahead of the Bell: Consumer Sentiment

The preliminary Reuters/University of Michigan monthly index of consumer sentiment will be released Friday at 9:55 a.m. EDT with a final report coming June 27. The market anticipates a reading of 59.8--the same as last month--according to a consensus estimate of Wall Street economists surveyed by Thomson/IFR. Economists' latest estimates ranged from 55 to 63.

Wall Street pays close attention to consumer sentiment because its corollary, consumer spending, represents about 70 percent of U.S. gross domestic product. GDP measures the value of final goods and services produced.

The survey consists of telephone interviews of 500 respondents who are asked about their attitudes toward, and expectations of, the U.S. economy. The index, created in 1952, reached its lowest reading, 51.7, in May 1980, during a deep recession. Internet hype helped push it to a peak of 112 in January 2000.

Last month, confidence fell to its lowest level since the June 1980 survey, pushed down by surging food and fuel costs, declining home values and shrinking incomes. It was the fourth straight decline in the index, which stood at 62.6 in April.

"Consumers are painfully aware that their living standards are shrinking under the weight of higher food and fuel prices and see little hope for improvement any time soon," Richard Curtin, the Michigan survey's director, said last month in a statement.

But economists at Global Insight predict consumer sentiment got a slight lift in early June as tax rebates offset higher fuel costs. Still, the consulting firm said consumer spending "faces major headwinds."

Some Americans used their tax rebate checks to shop in May, giving many U.S. retailers, including Costco Wholesale Corp. and Wal-Mart Stores Inc., stronger-than-expected sales last month.