University of Michigan Consumer Sentiment

The University of Michigan's Surveys of Consumers have asked Americans about their financial situation and economic outlook since the late 1940s. The sentiment index combines answers to five core questions about current and expected personal finances, business conditions over the next one and five years, and whether now is a good time to purchase large household items. A preliminary reading covers roughly the first two weeks of interviews; the revised figure adds the rest of the month.

Markets care about two things here. Sentiment is a rough, noisy guide to consumer spending, which dominates US output, though the link between how people feel and how much they spend has been inconsistent. More important in recent cycles have been the inflation-expectations questions, asking what price rises respondents anticipate over the next year and over five to ten years. The Federal Reserve watches whether long-run expectations stay anchored, and a notable rise has on occasion moved Treasury yields and the dollar on its own.

The survey switched from telephone to online interviews, which altered the sample and made comparisons with older readings less straightforward. Answers have also become increasingly split along partisan lines, so shifts in politics can move the index independently of economic conditions. The preliminary figure is often revised noticeably at month end.

The Conference Board's Consumer Confidence index offers a counterpart that leans more toward labour-market conditions. The New York Fed's Survey of Consumer Expectations provides a separate read on household inflation expectations.