The University of Michigan consumer sentiment numbers rolled in this morning, showing both good news and bad news. Let's first deal with the good news.

The index increased to 76.0 in late June, which is up from 73.6 in May and 75.5 in mid-June. The latest reading is the highest since January 2008, which is a month after the recession started. What's more, the reading came in better than the estimated 75.5. This is the good news ---- it signals that consumers believe that the economic situation is getting better as they jump into the consuming fray.

In the battle for pizza-chain dominance, it was Papa John's International (PZZA) that took the cake (or rather the crust). The Consumerist reports that the latest results from the University of Michigan's American Customer Satisfaction Index -- tracking points on customer expectations, perceived quality and value, customer complaints, and customer loyalty -- show Papa John's topped its peers in both the pizza business and the fast-food sector overall.

The chain improved its score by 6.7% from last year, hitting 80/100.

Today's earnings were deemed a disappointment despite some bottom-line comfort here. A weaker University of Michigan Consumer Survey report kept the DJIA muted, and whether we'd close above or under the 10,000 mark was something that wasn't known until the final hour of trading.

Here were today's unofficial closing bell levels:

Dow 9,996.21 -66.73 (-0.66%)
S&P 500 1,087.71 -8.85 (-0.81%)
Nasdaq 2,156.80 -16.49 (-0.76%)

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There are two competing positions on consumer sentiment right now. One is that it turned south last week, as people worried about their jobs – always a bad sign for spending. The other is that consumer sentiment didn't crap out in July: it fizzled in May. So, it's not a question of whether consumers aren't confident in the U.S. economic machine, it's just a matter of when the collective mood changed.

The July camp is set up around the Reuters/University of Michigan Surveys of Consumers, which makes now the weakest point for consumer sentiment since March. Those who favor May look to domestic demand for foreign goods, which went soft two months ago, bringing the monthly trade deficit to its narrowest since 1999. The U.S. trade gap unexpectedly tightened to $26 billion in May, with exports up 1.6% and imports down 0.6%, according to the U.S. Department of Commerce.

The market spent the day as it has many a Friday in the summer: slowing going no where.

The University of Michigan/Reuters consumer sentiment index showed a very modest increase in June up to 69, from 68.7 in May. The same survey showed that expectations for six months from now actually dropped.

Oil and gas prices still dominated the headlines. Oil still hovers around $72 and the average price of gas rose for the 45th consecutive day to $2.63. The has to rattle consumers who have precious little discretionary income as it is.

U.S. consumer confidence in April 2008 plunged to its lowest level in 26 years, suggesting American adults are becoming more concerned about the near-term health of the U.S. economy as it slides into its first recession in six years.

The Reuters/University of Michigan Surveys of Consumers said its index of confidence fell to 62.6 in April 2008 from 69.5 in March 2008, and 70.8 in February 2008, Reuters reported Friday. Last year the index averaged 85.6.

It was the index's lowest reading since March 1982's 62.0, which also was a recession year for the U.S. economy.

Economists surveyed by Bloomberg News had predicted that the April 2008 index would fall to 63.2.

'A great deal of concern'

Economist Glen Langan told BloggingStocks Friday the April 2008 consumer sentiment index is a decidedly negative reading. "It indicates concern about the slowdown has permeated the public. Negative sentiment is working its way through the real economy. Consumers are expressing a great deal of concern about high gasoline, oil and food prices, the job situation, and the uncertain economic landscape," Langan said. "It's a real harbinger because consumer activity is key to U.S. economic growth, accounting for about 65% of GDP."

Langan said the United States is almost certainly in recession. "If the nation isn't in a recession, we'll record nil growth, maybe 0.2% or 0.3%, in the first quarter," he said.

Langan added that there's a 50-60% chance the U.S. will remain in recession after Q2 2008.

Today was an interesting day when you consider that the overall tone has gone back to the bears' favor and a sell strength trading mentality is winning. The Commerce Department reported that consumer spending rose a slight +0.1% last month (which was in-line with economist surveys) but personal income rose to +0.5% in February, above the +0.3% rise expected. They must be paying more interest on credit cards or paying down debt.

Elsewhere, the federal Reserve noted it would auction another $100 Billion in securities to cash strapped banks in April. The University of Michigan released its preliminary consumer sentiment index for March and it had fallen to 69.5 in March from from 70.8 in February. Here are the unofficial closing averages on the US stock index levels:

• DJIA 12,216.57 (-85.89; -0.70%)
• S&P500 1,315.21(-10.45; -0.79%)
• NASDAQ 2,261.18 (-19.65; -0.86%)
• 10-Yr-TBond 3.466% (-0.068%)
• 52-WEEK LOWS

Apollo Group, Inc. (NASDAQ: APOL) was a disaster today. The online educator fell a sharp 26.8% to $41.21 after the company missed earnings by a mile with a $32 million loss in the quarter.

U.S. consumer sentiment fell to 69.5 in March 2008 from 70.8 in February 2008, as measured by the Reuters/University of Michigan Consumer Sentiment Index. (pdf)

Economists surveyed by Bloomberg News had expected the index to fall to 70.0 in March 2008.

Meanwhile, the current conditions index rose to 84.2 from 83.8 in February 2008. The expectations index declined to 60.1 from 62.4.

The most recent survey found that consumers were nearly unanimous in the opinion that the economy had already slipped into a recession, Reuters/University of Michigan survey research indicated. Consumers have adopted much more cautious spending plans, shifting more toward repaying debts and rebuilding their savings, the research indicated.

Further, a recession has occurred whenever the sentiment index declined as much as it has fallen during the past year, according to Richard Curtin, Director of the Reuters/University of Michigan Surveys of Consumers.

Economic Analysis: Economists tend to place less emphasis on the sentiment barometers, preferring to emphasize the 'iron and steel data' of U.S. economy metrics: production, corporate profits, housing starts, job growth, etc., which provide more-tangible indicators of economic activity. That said, the latest Reuters/UMich. consumer sentiment data is not on a positive track. Consumers, weighed down by rising gasoline and heating oil prices, the housing slump, and sluggish job growth, are understandably downbeat about the economy and its immediate prospects.