University of Michigan Consumer Sentiment Index

The University of Michigan Consumer Sentiment Index is a consumer confidence index published monthly by the University of Michigan. The index is normalized to have a value of 100 in December 1966.[1] Each month at least 500 telephone interviews are conducted of a contiguous United States sample. Fifty core questions are asked.[2]

University of Michigan Consumer Sentiment Index 1952–2012

The consumer confidence measures were devised in the late 1940s by Professor George Katona at the University of Michigan. They have now developed into an ongoing, nationally representative survey based on telephonic household interviews. The Index of Consumer Sentiment (ICS) is developed from these interviews. The Index of Consumer Expectations (a sub-index of ICS) is included in the Leading Indicator Composite Index published by the U.S. Department of Commerce, Bureau of Economic Analysis.

Objectives

The Index was created and still is published with the following objectives:

  • To assess near-time consumer attitudes on the business climate, personal finance, and spending
  • To promote an understanding of, and to forecast changes in, the national economy
  • To provide a means of incorporating empirical measures of consumer expectations into models of spending and saving behavior
  • To gauge the economic expectations and probable future spending behavior of the consumer
  • To judge the consumer's level of optimism/pessimism

Inputs

The Index of Consumer Expectations seeks to find how consumers view three things:

  • Their own financial situation
  • The short-term general economy
  • The long-term general economy

Implications

The Index has implications that can influence the value of the dollar, stocks, and bonds. Thomson Reuters used to be an exclusive distributor of the University of Michigan's survey results.[3]

CNBC reported on 12 June 2013 that the University of Michigan provided Thomson Reuters news service with the data early, so that Reuters could release the CSI to select, paying clients at 9:55 a.m., five minutes before it released the data to the general public on its web site at 10:00 a.m. In addition, Reuters released the data via high speed communication channels to select clients two seconds earlier. CNBC revealed that trading activity increased dramatically within milliseconds of 9:54:58 a.m. Traders who subscribed to either service were able to take advantage of the CSI before the university released it to the public. Former Securities and Exchange Commission Chairman Harvey Pitt opined that this might present a fairness issue and destroy confidence in the market by the public.[4]

Thomson Reuters announced on 8 July 2013 that it was suspending its early release practice as part of an agreement with the New York Attorney General's office.[5]

The University of Michigan stated it received about a million dollars a year from Reuters for this advance information, but said it couldn't do the research without the Reuters payment.[4]

Since January 2015, Index data is available from multiple sources including University's website,[6] Bloomberg,[7] and Macrobond.[8]

See also

References
  1. University of Michigan, University of Michigan: Consumer Sentiment [UMCSENT], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/UMCSENT, May 29, 2018.
  2. "Survey of Consumers". University of Michigan. Retrieved 9 July 2013.
  3. Mullins, Brody (7 October 2014). "University of Michigan Inks Deal to End Early Release of Survey". The Wall Street Journal. Retrieved 12 April 2015.
  4. Javers, Eamon (12 June 2013). "Thomson Reuters Gives Elite Traders Early Advantage". CNBC. Retrieved 12 June 2013.
  5. Popper, Nathaniel (8 July 2013). "Regulators Examining Sales of Early Financial Data". New York Times. Retrieved 8 July 2013.
  6. http://www.sca.isr.umich.edu/
  7. "University of Michigan Consumer Sentiment Index Analysis - CONSSENT". Bloomberg.
  8. https://www.macrobond.com/index.php/news/202/60/University-of-Michigan-consumer-sentiment-headline-data-added
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