Consumer sentiment (University of Michigan)
Consumer sentiment. Output and spending.
Updated
What is it?
A survey that asks people how they see their economy. Here we look at how much that sentiment has changed over the past year.
Change in points, versus 12 months ago, of the University of Michigan consumer sentiment index. The fall is scored rather than the level, which since 2022 has been at historic lows because of inflation without a recession.
Why does it matter?
If pessimism grows suddenly, people spend less and that slows the economy. The change is used because the level has been low for years because of inflation.
When should it be a concern?
It is a concern when consumer sentiment has fallen sharply in a year. Crisis Monitor turns each reading into a score from 0 to 100 using these bands:
| Situation | Value | What does it mean? |
|---|---|---|
| Calm | ≥ 0.0 pts | Score 0: no stress |
| Watch | ≤ -8.0 pts | Score 33: starts to draw attention |
| Stress | ≤ -16.0 pts | Score 66: risk zone |
| Extreme | ≤ -30.0 pts | Score 100: like in the worst crises |
Between one band and the next, the score is interpolated.
Consumer confidence (Michigan, 12-month change) in past crises
Since January 1990, its weekly low was -35.5 pts (Jul 2022) and its high was 22.8 pts (Jan 1993). The typical level (the median) is 0.2 pts.
| Crisis | At the start | Low during the crisis |
|---|---|---|
| 1990-91 recession | -2.3 pts | -30.0 pts (Nov 1990) |
| Russia and LTCM 1998 | 1.1 pts | -5.1 pts (Oct 1998) |
| Dot-com bubble and 2001 recession | 3.2 pts | -25.0 pts (Oct 2001) |
| Global Financial Crisis 2007-09 | -2.0 pts | -29.2 pts (Aug 2008) |
| European debt crisis 2011 | -2.4 pts | -13.1 pts (Sep 2011) |
| 2015-16 market scare | 11.8 pts | -6.1 pts (Jan 2016) |
| Q4 2018 sell-off | -0.6 pts | -2.1 pts (Nov 2018) |
| COVID panic 2020 | 8.6 pts | -27.7 pts (May 2020) |
| 2022 bear market | -10.1 pts | -35.5 pts (Jul 2022) |
Weekly data. Crises that do not appear predate the series.
How does Crisis Monitor use it?
- Area: Activity and spending (15% of the index). How much factories produce, how much people buy and how they feel.
- When does it move? Usually warns early.
- Data frequency: monthly.
- Quick alarm: No.
The index combines 17 indicators. See the methodology to learn how it is calculated.
Data source
FRED, Federal Reserve Bank of St. Louis (UMCSENT). Data may arrive late and does not constitute financial advice.
Frequently asked questions
Why is the drop measured rather than the level?
Because since 2022 the index has been at historic lows because of inflation without a recession having occurred. A rapid fall says more than the level itself.
Who publishes this index?
The University of Michigan, through a monthly survey of US households about their economic situation and expectations.