University of Michigan Consumer Sentiment Index
Encyclopedia
The University of Michigan Consumer Sentiment Index Thomson Reuters/University of Michigan Surveys of Consumers is a consumer confidence
index published monthly by the University of Michigan and Thomson Reuters. The index is normalized to have a value of 100 in December 1964. At least 500 telephone interviews are conducted each month of a United States sample which excludes Alaska and Hawaii. 5 core questions are asked.
The consumer confidence measures were devised in the late 1940’s by 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
.
Consumer confidence
Consumer confidence is an economic indicator which measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. How confident people feel about stability of their incomes determines their spending activity and therefore serves as...
index published monthly by the University of Michigan and Thomson Reuters. The index is normalized to have a value of 100 in December 1964. At least 500 telephone interviews are conducted each month of a United States sample which excludes Alaska and Hawaii. 5 core questions are asked.
The consumer confidence measures were devised in the late 1940’s by George Katona
George Katona
George Katona was a Hungarian-born American psychologist who was one of the first to advocate a rapprochement between economics and psychologists. Originally trained as a Gestalt psychologist working on problems of learning and memory, during the Second World War he became involved in American...
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
Bureau of Economic Analysis
The Bureau of Economic Analysis is an agency in the United States Department of Commerce that provides important economic statistics including the gross domestic product of the United States. Its stated mission is to "promote a better understanding of the U.S...
.
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; and
- 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
This Index has implications which can influence the following:- Stocks
- Bonds
- Dollar