The University of Michigan’s revised Consumer Confidence Index is a measure of consumer confidence in the United States. It is based on consumer surveys on current and future economic conditions.
The index is published monthly by the University of Michigan. It is one of the leading indicators of the public health of the US economy..
The index ranges from 0 to 150, and higher values indicate more positive consumer sentiment. Readings above 100 are generally considered to reflect strong consumer confidence.
The index contains several components, including consumers’ assessments of their personal financial situation, conditions for buying large household goods, and expectations about the general economy..
Changes in the index can provide insight into consumer spending patterns, as consumer sentiment is closely related to their willingness to make purchases. Strong sentiment often leads to increased consumer spending.
The preliminary or “rapid” estimate of the index is released in the middle of the month, followed by the revised reading at the end of the month. Revised data tends to get more attention from economists and analysts.
The University of Michigan’s Consumer Confidence Index is closely watched by policymakers, businesses and investors as an important barometer of the U.S. economic outlook..
UoM Consumer Confidence Index release dates.
The University of Michigan’s revised consumer confidence index (UoM) is released twice a month. Here’s the timeline for its release:
Initial report: It is usually released around the middle of the month. It provides an early look at consumer sentiment based on a sample of survey responses collected so far.
Revised (or final) report: released at the end of the month. It includes additional survey responses received after the initial report, providing a more comprehensive and updated view of consumer confidence for the month.
The revised report modifies the preliminary estimates from the initial report and provides a final measure of consumer confidence for that month.
Key Components of the University of Michigan Consumer Confidence Survey
The University of Michigan (UoM) Revised Consumer Survey includes several key components that together provide a comprehensive view of consumer attitudes and expectations regarding the economy. These components are:
Current economic conditions:
- Current personal financial situation: Measures consumers’ perceptions of their current financial situation compared to last year.
- Current Economic Conditions: Evaluate consumer opinions about current business conditions and economic environment.
Consumer expectations:
- Personal Financial Outlook: Measures consumers’ expectations regarding their financial situation in the coming year.
- Economic Outlook: Assesses consumer expectations for business conditions and economic projections over the next year.
- Long-term economic outlook: You look at consumer expectations for the economy over a longer period, usually five years.
Inflation forecasts:
- Short-term inflation expectations: Reflects consumer expectations for inflation over the next year.
- Long-term inflation forecast: Captures consumer expectations for inflation over the next five to ten years.
Terms of purchase:
- Conditions for the purchase of large household items: Measures consumer attitudes towards the purchase of durable goods such as appliances and furniture.
- Conditions for buying vehicles: Evaluate consumer opinions about whether it is a good or bad time to buy a car.
- Conditions for buying homes: assesses consumers’ perceptions of the housing market and whether it is a good time to buy a home.
Each of these components contributes to the overall consumer confidence index, providing insight into both current economic conditions and future economic outlook. Policymakers, businesses and investors use the survey results to measure consumer confidence and predict economic trends. The University of Michigan’s Consumer Confidence Index is closely watched by policymakers, businesses, and investors as an important barometer of the U.S. economic outlook.
Consumer sentiment eases in April and inflation expectations rise
A survey on Friday showed that U.S. consumer sentiment eased in April while inflation expectations for the next 12 months and beyond increased.
The University of Michigan’s preliminary reading of the overall consumer confidence index came in at 77.9 this month, compared to the final reading of 79.4 in March.
Since January, the sentiment index has remained within a very narrow range of 2.5 points, well below the five points the University of Michigan said were necessary to achieve a statistically significant difference in readings. Economists polled by Reuters had expected a preliminary reading of 79.0.
“In general, consumers are reticent to judge the economy in light of the upcoming elections, which, in the eyes of many consumers, could have a significant impact on the trajectory of the economy,” consumer surveys director Joan Hsu said in a statement.
The survey reading of one-year inflation forecasts increased to 3.1% in April from 2.9% in March, rising above the 2.3-3.0% range seen in the two years prior to the COVID-19 pandemic. The five-year inflation forecast in the survey rose to 3.0% from 2.8% in the previous month.
The gold market holds strong gains above $2,400, trading near session highs as consumer sentiment fell sharply and inflation expectations rose in April.
The University of Michigan said its preliminary consumer confidence index fell to 77.9, down from March’s revised reading of 79.4. The data came in well below expectations as economists were looking for sentiment to remain relatively stable at 79.
Consumer confidence index fell in May as expectations of financial conditions fell
The University of Michigan’s consumer confidence index fell to 69.1 in May versus 67.4 expected and 77.2 in April, after three months of slowdown. However, the latest reading for May was slightly better than the mid-month reading of 67.4.
Director of Consumer Surveys Joan Hsu said: “This 8.1-point drop is statistically significant and leads to sentiment reaching its lowest reading in about five months.” “Next year’s outlook for business conditions has seen a particularly marked decline, while views on personal finances have changed little.”
The forecast index has fallen since April, falling to 68.8 from 76.0, but exceeding expectations of 66.5.
The current conditions index fell to 69.6 from 79.0 in the previous month, but still exceeds the expected 68.8. Consumers expect higher unemployment and slower income growth. As interest rates continue to rise, “it indicates that there are multiple factors that pose a negative risk to consumer spending,” Hsu said. Inflation expectations for next year rose to 3.3%, below expectations of 3.5%, from 3.2% previously.
Implied five-year inflation expectations remained unchanged at 3.0% versus 3.0% projected and 3.0% previously. For some perspectives, Hsu noted that sentiment is still almost 20% higher than last year and around 40% above its all-time low in June 2022.
DJIA SPX shares rose in early trading on Friday. The yield on the 10-year Treasury bond BX:TMUBMUSD10Y rose sharply to 4.496%.
The University of Michigan had previously reported that inflation expectations for next year jumped to 3.5 percent, although the downwardly adjusted figure remains the highest since it reached 4.5 percent in November.
The revised data also showed that long-term inflation expectations remained flat at 3.0% for the second consecutive month compared to the previously reported rise of 3.1%.
