A monthly survey of U.S. consumer attitudes and expectations conducted by the University of Michigan. The index provides early insight into consumer spending plans that drive economic growth.
What Michigan Sentiment Measures
The University of Michigan Survey of Consumers measures consumer attitudes through telephone interviews with approximately 500 U.S. households. It produces three indices: the headline Index of Consumer Sentiment, the Current Economic Conditions index, and the Index of Consumer Expectations. A preliminary reading is released mid-month, with the final revision at month-end.
Sentiment and the Economy
Michigan Consumer Sentiment is one of two major U.S. Consumer Confidence surveys (alongside the Conference Board index). Since consumer spending represents roughly two-thirds of Gross Domestic Product (GDP), shifts in consumer sentiment can foreshadow changes in spending and economic growth.
The survey also includes inflation expectation questions, which have gained importance as a tool for gauging whether inflation expectations are becoming anchored or unanchored. The Federal Reserve monitors these expectations closely when setting policy.
Forex Trading
Preliminary readings released mid-month can cause U.S. Dollar (USD) volatility, especially when inflation expectations shift. The final revision typically has less impact unless it diverges significantly from the preliminary number.
Related Terms
Consumer Confidence
A survey-based indicator measuring how optimistic or pessimistic consumers are about the economy and their personal financial situation. Higher confidence typically supports a currency by signaling future spending growth.
Retail Sales
A monthly economic indicator measuring the total receipts of retail stores, reflecting consumer spending patterns. Since consumer spending drives roughly two-thirds of GDP in most developed economies, retail sales significantly impacts currency valuations.
Economic Calendar
A schedule of upcoming economic data releases, central bank meetings, and political events that may affect financial markets. Economic calendars are essential planning tools for forex traders.
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