Study finds consumers still lacking confidence in the economy
A new analysis from Market Rates Insight (MRI) reveals that consumers are exhibiting one-third less (36 index points) confidence in the economy during the current downturn in deposit rates compare to the previous deposit-rate dip in January of 2004. In January of 2004, which was the previous downturn in deposit rates, the University of Michigan Consumer Sentiment Index (MCSI) stood at 103.8, and the national average rate for deposits was 1.88 percent. In July 2010, the MCIS stood at 67.8, and the national average rate for deposit hit a new record low of 0.99 percent. “The low level of consumer confidence indicates that this deposit-rate downturn is different” said Dan Geller, Ph.D. executive vice president at Market Rates Insight. “Some of the main differences in today’s economic indicators are a much higher unemployment rate, lower Fed funds rate and much slower economic growth, which means that we should not expect interest rates on deposits to go up any time soon.” The MCSI has a strong and significant linear relationship to the national average rate for deposits. Although MCSI is subjective in nature, it does provide a snapshot of how consumers feel about the economy, which impacts consumers’ spending and investments decisions. Click here to view a complete analysis of the study. For more information, visit www.marketratesinsight.com.