Thomson Reuters : University of Michigan: Main Concern of Consumers - Dismal Wage Prospects

Monitoring trends for over 60 years

May 30, 2014

economy was anticipated to be strong enough to produce
more jobs in the year ahead. The main concern expressed by consumers involved dismal prospects for wage growth. Tiny wage gains meant that nearly half of all households anticipated declines in inflation-adjusted in- comes during the year ahead. Overall, the data is consistent with gains in real consumer expenditures of 2.5% during 2014.

When asked about their financial prospects for the year ahead, an improved financial situation was expected by
just 25% of all consumers in May, down from 32% last month. Gains in nominal incomes were anticipated by only half of all households, and among those that did anticipated gains, an increase of just 1% or 2% was most commonly expected. Importantly, consumers under age 45 expected the smallest income increases in six months.

Vehicle buying plans were less favorable than last month or last year, especially among households in the top
third of the income distribution. The decline was primarily due to less favorable references to discounts. Dis- counts are critical to buyers who only expect limited income gains. While home buying conditions were viewed
less favorably, it was offset by improved home selling conditions, largely due the rising value of owned homes.

The Sentiment Index was 81.9 in the May 2014 survey, down from 84.1 in April, and 84.5 in last May's survey.
The May decline still left the Index comparable to the average level during the prior four months (81.7). The largest May declines were recorded in the Current Conditions

e

Richard T. Curtin • Director, Thomson Reuters/University of Michigan Surveys of Consumers • Phone 734.763.5224

Thomson Reuters PR Hotline: 646.223.7222 ext. 1 • h tt p :/ /p re s s .s ca .is r.um ic h .ed u

Thomson Reuters is the world's leading source of intelligent information for businesses and professionals.
We combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial and risk, legal, tax and accounting, intellectual property and science and media mar- kets, powered by the world's most trusted news organization. With headquarters in New York and major operations in London and Eagan, Minnesota, Thomson Reuters employs approximately 60,000 people and operates in over 100 countries. Thomson Reuters shares are listed on the Toronto and New York Stock Ex- changes. For more information, go to www.thomsonreuters.com.

Established in 1948, the Institute for Social Research (ISR) at the University of Michigan is among the world's oldest social science research organizations, and a world leader in the development and application
of social science methodology. The ISR conducts some of the most widely-cited surveys and studies in the nation, including the Thomson Reuters/University of Michigan Surveys of Consumers, the American
National Election Studies, the Monitoring the Future Study, the Panel Study of Income Dynamics, the Health and Retirement Study, and the National Survey of Black Americans and the World Values Surveys. ISR is also home to the Inter-University Consortium for Political and Social Research (ICPSR), the world's
largest computerized social science data archive.

distributed by