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Friday, the University of Michigan Consumer Sentiment final number for April came in at 76.4, a welcome improvement over the preliminary reading of 72.3, but below the March final of 78.6. The Briefing.com consensus was for 72.4. So, choose your spin. Sentiment is worse than a month ago, but better than in early April, which apparently influenced economists' collective expectations.

See the chart below for a long-term perspective on this widely watched index. I've highlighted recessions and included real GDP to help evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.

(click to enlarge)

To put Friday's report into the larger historical context since its beginning in 1978, consumer sentiment is 10% below the average reading (arithmetic mean) and 9% below the geometric mean. The current index level is at the 29th percentile of the 424 monthly data points in this series.

The Michigan average since its inception is 85.2. During non-recessionary years the average is 87.6. The average during the five recessions is 69.3. So the latest sentiment number puts us about seven points above the average recession mindset and 11.3 points below the non-recession average.

It's important to understand that this indicator can be somewhat volatile. For a visual sense of the volatility here is a chart with the monthly data and a three-month moving average.

(click to enlarge)

For the sake of comparison here is a chart of the Conference Board's Consumer Confidence Index (monthly update here). The Conference Board Index is the more volatile of the two, but the broad pattern and general trends are remarkably similar to the Michigan Index.

(click to enlarge)

And finally, the prevailing mood of the Michigan survey is also similar to the mood of small business owners, as captured by the NFIB Business Optimism Index (monthly update here).

(click to enlarge)

The trend in sentiment since the Financial Crisis lows has been one of slow improvement. We saw a major drop in sentiment in 2011 followed by a rapid return to the general trend of higher highs. The March final reading was the third month of improving sentiment, but the April final moves us a couple of steps in the wrong direction. But, in the spirit of a glass half full, Friday's number beat expectations and was 4.1 points higher than the April preliminary survey.

Source: Michigan Consumer Sentiment: Better Than Expected, But Worse Than Last Month