US Macro Updates

The One Stop Portal for US Macroeconomic Data. Simplified and Summarized! 

We simplify and summarize key data so that you don’t have to spend hours reading confusing and long media releases. Read key economic releases and major events here in under 2 minutes. And we will explain the key takeaway for you. Stay informed and form a robust view on macroeconomic matters to aid your successful investment decisions

Michigan Consumer Sentiment Index

31st Jul 2026 NEW

Key takeaway: The Michigan Consumer Sentiment Index is a closely watched leading indicator because household confidence directly shapes spending decisions, which account for roughly two-thirds of US GDP. When consumers feel pessimistic about their financial conditions and the broader economy, they tend to cut discretionary spending, increase precautionary saving, and delay large purchases such as homes and vehicles, creating a drag on growth that typically materialises over the following one to three quarters. Sentiment is also deeply intertwined with inflation expectations embedded in the survey, and persistently elevated expectations can complicate Fed credibility by making it harder to anchor long-run price stability without additional monetary tightening. Over the past 12 to 24 months, sentiment has remained historically depressed, oscillating in a range that reflects lingering cost-of-living pressures, elevated interest rates, and uncertainty around the labour market and fiscal policy, keeping the index well below its long-run average of around 85. The June 2026 reading of 49.5, while representing a meaningful 4.7-point monthly improvement, still sits in deeply pessimistic territory, suggesting that consumers have not yet meaningfully revised their outlook for personal finances or the broader economy. A sustained recovery in sentiment toward the 55 to 60 range would be needed before analysts could confidently interpret household psychology as a tailwind for consumption growth. At current levels, the data remain consistent with cautious consumer behaviour and continued headwinds for GDP growth in the second half of 2026.

Michigan Sentiment increased 4.7 pts in Jun to 49.5.

26th Jun 2026 NEW

Key takeaway: The University of Michigan Consumer Sentiment Index for June 2026, with the final reading released on June 26, delivered a partial recovery from May’s record low but left the broader picture of historically depressed consumer confidence firmly intact. The final index came in at 49.5 — revised up from the preliminary 48.9 but just below the consensus forecast of 50.0 — ending a three-month streak of declines and recovering about 10% from May’s all-time low of 44.8, though it remains the second-lowest reading in data stretching back to the 1970s and sits nearly 20% below a year ago. The Expectations Index rose to 50.7, its highest in three months, driven partly by a 16% surge in consumers’ five-year business conditions outlook — interpreted by survey director Joanne Hsu as a signal that households are increasingly viewing the economic damage from the Iran conflict as temporary rather than structural. The Current Conditions Index rose to 47.7 from 45.8, with gains broadly distributed across income, wealth, and political affiliation — a notably bipartisan improvement after months in which the index had split sharply along partisan lines. On inflation expectations, the picture was mixed but cautiously encouraging: year-ahead expectations edged down to 4.6% from 4.8% in May but remained well above the 3.4% reading seen in February before the conflict began, while long-run five-to-ten-year expectations fell more sharply to 3.3% — pulling back from May’s 3.9% spike and returning to levels closer to the pre-war baseline, though still above the 2.8%–3.2% range that prevailed through 2024.

Michigan Sentiment – Jun 2026: +4.7 pts (49.5)

22nd May 2026 NEW

Key takeaway: The Michigan Consumer Sentiment Index is a closely watched leading indicator because consumer confidence directly shapes household spending decisions, which account for roughly two-thirds of US GDP. When sentiment deteriorates, households tend to curtail discretionary purchases, increase precautionary savings, and delay major expenditures such as vehicles and appliances, creating a measurable drag on economic output in subsequent quarters. The relationship between sentiment and inflation expectations is particularly significant for the Federal Reserve, as persistently pessimistic readings often reflect eroding confidence in price stability, which can complicate the central bank’s credibility and its ability to anchor long-run inflation expectations. Over the past 12 to 24 months, sentiment has remained in historically depressed territory, struggling to recover meaningfully from the sharp declines that accompanied the post-pandemic inflation surge, and any tentative rebounds have proven fragile and short-lived. The April 2026 reading of 49.8 sits well below the 80 to 100 range historically associated with a healthy consumer backdrop, signaling that households remain deeply uneasy about their financial circumstances and the broader economic outlook. At this level, the index points to continued softness in real consumption growth, with particular weakness likely concentrated in big-ticket and interest-rate-sensitive categories. Should sentiment remain anchored near these lows, the drag on personal consumption expenditures could weigh materially on GDP growth estimates for the second and third quarters of 2026.

Michigan Sentiment decreased 3.5 pts in Apr to 49.8.

Michigan Sentiment – April 2026: -3.5 pts (49.8)

24th Apr 2026 NEW

Key takeaway: The Michigan Consumer Sentiment Index is a leading indicator of household spending intentions, as confidence levels tend to predict whether consumers will increase or pull back on discretionary purchases in the months ahead, directly influencing GDP growth given that personal consumption represents roughly two-thirds of the US economy. When sentiment deteriorates, households typically tighten budgets, delay big-ticket purchases, and build precautionary savings, creating a self-reinforcing drag on economic activity. Embedded within the Michigan survey are inflation expectations data, which the Federal Reserve monitors closely as a gauge of its own credibility; persistently elevated inflation expectations can complicate the Fed’s ability to ease policy without risking a re-acceleration of price pressures. Over the past 12 to 24 months, sentiment has remained well below the long-run historical average near 85, reflecting sustained pressure from elevated prices, higher borrowing costs, and broader uncertainty around the economic outlook. The March 2026 reading of 53.3 represents a further deterioration, extending what has been a fragile and inconsistent recovery from the historically depressed levels seen in 2022. At this level, sentiment signals meaningful headwinds to consumer spending momentum, raising the probability of softer retail sales and reduced services demand in the near term. Taken together, the continued weakness in confidence adds downside risk to consensus GDP growth forecasts and keeps pressure on policymakers to carefully balance inflation control against the risk of a sharper economic slowdown.

Michigan Sentiment decreased 3.3 pts in Mar to 53.3.

Michigan Sentiment – March 2026: -3.3 pts (53.3)

27th Mar 2026 NEW

Key takeaway: The Michigan Consumer Sentiment Index is a closely watched leading indicator because household confidence tends to predict future consumer spending, which accounts for roughly two-thirds of U.S. GDP. When sentiment falls, households typically pull back on discretionary purchases, reduce credit usage, and increase precautionary savings, creating a drag on overall economic growth. Sentiment also carries an important signaling function around inflation expectations — persistently low readings can reflect eroding Fed credibility, as consumers who doubt the central bank’s ability to control prices tend to front-load purchases or demand higher wages, both of which can entrench inflationary dynamics. Over the past 12 to 24 months, sentiment has remained deeply depressed by historical standards, hovering well below the long-run average near 85, suggesting that consumers have yet to fully absorb the Fed’s progress on disinflation or feel relief from cumulative price-level increases since 2021. The February reading of 56.6, while marginally higher than the prior month, remains at a level historically associated with recessionary conditions or periods of significant financial stress. Such subdued confidence implies that consumption growth is likely to stay modest at best, limiting the upside for GDP in the near term. Until sentiment stages a more meaningful recovery, the consumer sector will likely remain a headwind rather than a tailwind for the broader economy.

Michigan Sentiment increased 0.2 pts in Feb to 56.6.

Michigan Sentiment – February 2026: +0.2 pts (56.6)

13th Mar 2026

Key takeaway: Preliminary results from the University of Michigan showed that the Index of Consumer Sentiment declined to 55.5 in March, down from 56.6 in February, marking a 1.9% monthly decline and the lowest reading so far this year. Consumer sentiment had fallen sharply since the tariff announcements and had reached levels seen last in mid 2022 when inflation was at its peak and the Fed had commenced its rate hiking cycle. However, with trade tensions reducing, softer inflation prints and declining inflation expectations, consumer sentiment significantly improved back again. However, even with the recent improvement consumer sentiment remains significantly lower than pre-covid levels as well as the highs of 2021, mostly due to a weakening job market and political uncertainties. The latest survey also showed that the Current Economic Conditions index increased to 57.8, while the Consumer Expectations index declined to 54.1, indicating weaker consumer views regarding the outlook for economic conditions. Meanwhile, median inflation expectations for the year ahead remained unchanged at 3.4%, while five-year inflation expectations edged down slightly to 3.2%. Taken together, the latest survey suggests that US consumer sentiment weakened modestly in early March, reflecting increased uncertainty among households even as longer-term inflation expectations remained relatively stable. Inflation expectations have remained remarkably anchored over the past 3 years, despite witnessing a major inflationary episode in world and US economy in 2021 and 2022. Both, the University of Michigan survey and the NY Fed survey, have yielded similar results on inflation expectations over the past 3 years, although the Michigan survey has generally pointed to some higher numbers than the NY Fed Survey.  

6th Feb 2026

Key takeaway: Inflation expectations have remained remarkably anchored over the past 3 years, despite witnessing a major inflationary episode in world and US economy in 2021 and 2022. Both, the University of Michigan survey and the NY Fed survey, have yielded similar results on inflation expectations over the past 3 years, although the Michigan survey has generally pointed to some higher numbers than the NY Fed Survey. The latest preliminary read shows the Index for Consumer Sentiment for the month of February was mostly unchanged from the previous month. Consumer sentiment had fallen sharply since the tariff announcements and had reached levels seen last in mid 2022 when inflation was at its peak and the Fed had commenced its rate hiking cycle. However, with trade tensions reducing, softer inflation prints and declining inflation expectations, consumer sentiment significantly improved back again. However, even with the recent improvement consumer sentiment remains significantly lower than pre-covid levels as well as the highs of 2021, mostly due to a weakening job market and political uncertainties. The headline index improved marginally from 56.4 to 57.3. The Index of Consumer Expectations decreased marginally from 57.0 to 56.7. The Current Economic Conditions Index improved from 55.4 to 58.3. Year ahead inflation expectations declined markedly from 4.0% to 3.5%. Long run inflation expectations increased slightly from 3.3% to 3.4%. The Fed pays close attention to the Michigan survey outcomes but it has also mentioned that it pays more attention to the Fed survey compared to the Michigan survey.   

9th Jan 2026

Key takeaway: Inflation expectations have remained remarkably anchored over the past 3 years, despite witnessing a major inflationary episode in world and US economy in 2021 and 2022. Both, the University of Michigan survey and the NY Fed survey, have yielded similar results on inflation expectations over the past 3 years, although the Michigan survey has generally pointed to some higher numbers than the NY Fed Survey. The latest preliminary read shows the Index for Consumer Sentiment for the month of January improved further from the previous month. Consumer sentiment had fallen sharply since the tariff announcements and had reached levels seen last in mid 2022 when inflation was at its peak and the Fed had commenced its rate hiking cycle. However, with trade tensions reducing, softer inflation prints and declining inflation expectations, consumer sentiment significantly improved back again. Consumer sentiment once again declined in August, September, October and November, mostly on the back of a weakening job market and rising inflation fears. However, we have once again seen consumer sentiment edge up for the past 2 months. December was the first month in the last 5 months to see a slight rise in consumer confidence and that trend continues in January as well. The headline index improved marginally from 52.9 to 54.0. However, consumer confidence still remains lower than the levels seen at the start of 2025. The Index of Consumer Expectations improved marginally from 54.6 to 55.0. The Current Economic Conditions Index also improved marginally from 50.4 to 52.4. Year ahead inflation expectations held steady at 4.2%. Long run inflation expectations increased slightly from 3.2% to 3.4%. The Fed pays close attention to the Michigan survey outcomes but it has also mentioned that it pays more attention to the Fed survey compared to the Michigan survey.   

5th Dec 2025

Key takeaway: The latest preliminary read shows the Index for Consumer Sentiment for the month of December improved a bit from the previous month. Consumer sentiment had fallen sharply since the tariff announcements and had reached levels seen last in mid 2022 when inflation was at its peak and the Fed had commenced its rate hiking cycle. However, with trade tensions reducing, softer inflation prints and declining inflation expectations, consumers had once again started to display signs of confidence. However, sentiment once again declined in August, September, October and November, mostly on the back of a weakening job market and rising inflation fears. December was the first month on the last 5 to see a slight rise in consumer confidence. The headline index improved marginally from 51.0 to 53.3 in December. However, consumer confidence still remains closer to the lows of 2022 and is sharply down from the highs seen at the start of 2025. The Index of Consumer Expectations improved from 51.0 to 55.0. The Current Economic Conditions Index declined marginally from 51.1 to 50.7. Most importantly though, year ahead inflation expectations fell from 4.5% to 4.1%. One year expectations have scaled back from the highs seen a few months back. Long run inflation expectations also declined to 3.2% from 3.4%. The Fed pays close attention to the Michigan survey outcomes but it has also mentioned that it pays more attention to the Fed survey compared to the Michigan survey. Inflation expectations in the NY Fed survey have also been higher, but not by a similar magnitude.    

7th Nov 2025

Key takeaway: The latest preliminary read shows the Index for Consumer Sentiment for the month of November fell sharply from the previous month. Consumer sentiment had fallen sharply since the tariff announcements and had reached levels seen last in mid 2022 when inflation was at its peak and the Fed had commenced its rate hiking cycle. However, with trade tensions reducing, softer inflation prints and declining inflation expectations, consumers had once again started to display signs of confidence. However, sentiment once again declined in August, September and October, mostly on the back of a weakening job market and rising inflation fears. The headline index further declined from 53.6 to 50.3 in November. The Index now is closer to the lows of 2022 and is sharply down from the highs seen at the start of 2025. The Index of Consumer Expectations declined marginally from 50.3 to 49.0. The Current Economic Conditions Index also declined sharply from 58.6 to 52.3. Year ahead inflation expectations ticked up slightly from 4.6% to 4.7%, and remain elevated compared to a couple of months back. Long run inflation expectations declined to 3.6% from 3.7%. The Fed pays close attention to the Michigan survey outcomes but it has also mentioned that it pays more attention to the Fed survey compared to the Michigan survey. Inflation expectations in the NY Fed survey have also been higher, but not by a similar magnitude.    

10th Oct 2025

Key takeaway: The latest preliminary read shows the Index for Consumer Sentiment for the month of October was mostly unchanged. Consumer sentiment had fallen sharply since the tariff announcements and had reached levels seen last in mid 2022 when inflation was at its peak and the Fed had commenced its rate hiking cycle. However, with trade tensions reducing, softer inflation prints and declining inflation expectations, consumers had once again started to display signs of confidence. However, sentiment once again declined in August and September, mostly on the back of a weakening job market and rising inflation fears. The Index of Consumer Expectations was also mostly flat at 51.2. Similarly, the Current Economic Conditions Index was also mostly unchanged at 61.0. Year ahead inflation expectations declined slightly from 4.7% to 4.6%, but remain elevated compared to a couple of months back. Long run inflation expectations held steady at 3.7%. The Fed pays close attention to the Michigan survey outcomes but it has also mentioned that it pays more attention to the Fed survey compared to the Michigan survey. Inflation expectations in the NY Fed survey have also been higher, but not by a similar magnitude.    

12th Sep 2025

Key takeaway: The latest preliminary read shows the Index for Consumer Sentiment for the month of September declined from 58.2 to 55.4. This is the 2nd month in a row of declining consumer sentiment. Consumer sentiment had fallen sharply since the tariff announcements and had reached levels seen last in mid 2022 when inflation was at its peak and the Fed had commenced its rate hiking cycle. However, with trade tensions reducing, softer inflation prints and declining inflation expectations, consumers had once again started to display signs of confidence. However, the survey has shows a decline once again in sentiment over the past couple of months, mostly on the back of a weakening job market and rising inflation fears. The Index of Consumer Expectations also decreased from 55.9 to 51.8. On the other hand, Current Economic Conditions Index decreased only marginally from 61.7 to 61.2. Year ahead inflation expectations held steady at around 4.8%, but remain elevated compared to a couple of months back. Long run inflation expectations rose from 3.5% to 3.9%. The Fed pays close attention to the Michigan survey outcomes but it has also mentioned that it pays more attention to the Fed survey compared to the Michigan survey. Inflation expectations in the NY Fed survey have also been higher, but not by a similar magnitude.    

15th Aug 2025

Key takeaway: The latest preliminary read shows the Index for Consumer Sentiment for the month of August declined from 61.7 to 58.6. Consumer sentiment had fallen sharply since the tariff announcements and had reached levels seen last in mid 2022 when inflation was at its peak and the Fed had commenced its rate hiking cycle. However, with trade tensions reducing, softer inflation prints and declining inflation expectations, consumers have once again started to display signs of confidence. While the latest month shows a decline once again in sentiment, the magnitude of the decline is not very significant. The Index of Consumer Expectations also decreased slightly from 57.7 to 57.2. On the other hand, Current Economic Conditions Index decreased sharply from 68.0 to 60.9. Year ahead inflation expectations rose once again from 4.5% to 4.9%. Long run inflation expectations also rose from 3.4% to 3.9% this month. The Fed pays close attention to the Michigan survey outcomes but it has also mentioned that it pays more attention to the Fed survey compared to the Michigan survey. Inflation expectations in the NY Fed survey have also been higher, but not by a similar magnitude.    

18th Jul 2025

Key takeaway: The latest preliminary read shows the Index for Consumer Sentiment for the month of July improved from 60.7 to 61.8. Consumer sentiment had fallen sharply since the tariff announcements and had reached levels seen last in mid 2022 when inflation was at its peak and the Fed had commenced its rate hiking cycle. However, with trade tensions reducing, softer inflation prints and declining inflation expectations, consumers have once again started to display signs of confidence. The Index of Consumer Expectations also improved from 58.1 to 58.6. The Current Economic Conditions Index increased from 64.8 to 66.8. Year ahead inflation expectations came down from 5.0% to 4.4%. Long run inflation expectations also fell from 4.0% to 3.6% this month. The Fed pays close attention to the Michigan survey outcomes but it has also mentioned that it pays more attention to the Fed survey compared to the Michigan survey. Inflation expectations in the NY Fed survey have also been higher, but not by a similar magnitude.    

13th Jun 2025

Key takeaway: With trade tensions abating, market participants were expecting consumer sentiment data to improve as well.  The latest preliminary read shows the Index for Consumer Sentiment for the month of June improved for the 1st time in 6 months, from 52.2 to 60.5. Consumer sentiment had been fallen sharply since the tariff announcements and had reached levels seen last in mid 2022 when inflation was at its peak and the Fed had commenced its rate hiking cycle. However, with trade tensions reducing, consumers have once again started to display signs of confidence. The Index of Consumer Expectations, improved from 47.9 to 58.4. The Current Economic Conditions Index increased from 58.9 to 63.7. Consumer responses to the survey questions tend to be volatile and significantly influenced by current events, eg. pump prices, latest tariff threats, etc. Oil has sharply risen by over 10% in a day since the Israel Iran escalation. This might potentially impact sentiment once again. Year ahead inflation expectations also came down from the astronomical level of 6.6% to 5.1%. Long run inflation expectations also fell from 4.2% to 4.1% this month. The Fed pays close attention to the Michigan survey outcomes but it has also mentioned that it pays more attention to the Fed survey compared to the Michigan survey. Inflation expectations in the NY Fed survey have also been higher, just not by a similar magnitude.    

16th May 2025

Key takeaway: Consumer sentiment continues to tumble to multi year lows on the back of tariff announcements and the ensuing uncertainty. The latest preliminary read shows the Index for Consumer Sentiment for the month of May declined from 52.2 to 50.8. Consumer Sentiment had generally been rising since mid 2024, but it had especially shot up after the US Presidential election in November. However, since then consumer sentiment has absolutely collapsed. There was some divergence seen in the sentiment survey responses between Republican and Democratic affiliated respondents post the inauguration. However, since the tariff announcements sentiment and expectations have fallen across the board. Sentiment, among the Republican voters, has especially fallen in the latest survey for the month of May. The latest level is the lowest level since mid 2022 when inflation was at its peak and the Fed had commenced its rate hiking cycle! The Index of Consumer Expectations, declined from 47.3 to 46.5. The Current Economic Conditions Index decreased from 59.8 to 57.6. Consumer responses to the survey questions tend to be volatile and significantly influenced by current events, eg. pump prices, latest tariff threats, etc. With recent tariff pauses and exemptions, we can expect sentiment to recover a bit in the short run. Nonetheless, the downward shift in consumer sentiment is notable. Yet, the most notable point of the latest release once again – similar to the last 3 months – was the massive rise in inflation expectations. Year ahead inflation expectations soared even further from 6.5% to 7.3%. This is the 5th consecutive month of unusual +0.5% increases. The current reading is the highest since 1981 and also well above the 2.3% to 3.0% range seen in the 2 years prior to the pandemic. Once again the surge in inflation expectations was recorded across all political affiliations. Long run inflation expectations also rose further from 4.4% to 4.6% this month. The Fed pays close attention to the Michigan survey outcomes and this sharp rise is very unwelcome news. Yet, there are a couple of other points to note about inflation expectations. First, long run inflation expectation readings have been a bit more anchored in the NY Fed Survey and the Fed pays more attention to the Fed survey compared to the Michigan survey. Second, even though survey based inflation expectations have increased, market based measures of inflation expectations have absolutely collapsed. The 5 year forward 5 year inflation expectations had tanked from 2.35% at the start of the year to almost 2.0% during the Trump tariff announcements. Post the tariff pause and the recent agreements with China, 5 year forward 5 year inflation expectations have risen back to around 2.3%. The Fed will have its eyes on both the survey based measures and the market based measures.   

11th Apr 2025

Key takeaway: Consumer sentiment continues to take a tumble on the back of tariff announcements and the ensuing uncertainty. The latest preliminary read shows the Index for Consumer Sentiment for the month of April declined from 57.0 to 50.8. Consumer Sentiment had generally been rising since mid 2024, but it had especially shot up after the US Presidential election in November. However, since then consumer sentiment has absolutely collapsed. There was some divergence seen in the sentiment survey responses between Republican and Democratic affiliated respondents post the inauguration. However, since the tariff announcements sentiment and expectations have fallen across the board. The latest level is the lowest level since mid 2022 when inflation was at its peak and the Fed had commenced its rate hiking cycle! The Index of Consumer Expectations, declined from 52.6 to 47.2. The Current Economic Conditions Index decreased from 63.8 to 56.5. Consumer responses to the survey questions tend to be volatile and significantly influenced by current events, eg. pump prices, latest tariff threats, etc. With recent tariff pauses and exemptions, we can expect sentiment to recover a bit in the short run. Nonetheless, the downward shift in consumer sentiment is notable. Yet, the most notable point of the latest release once again – similar to the last 2 months – was the massive rise in inflation expectations. Year ahead inflation expectations soared further from 5.0% to 6.7%. This is the 4th consecutive month of unusual +0.5% increases. The current reading is the highest since 1981 and also well above the 2.3% to 3.0% range seen in the 2 years prior to the pandemic. Once again the surge in inflation expectations was recorded across all political affiliations. Long run inflation expectations also rose further from 4.1% to 4.4% this month. The Fed pays close attention to the Michigan survey outcomes and this sharp rise is very unwelcome news. Yet, there are a couple of other points to note about inflation expectations. First, long run inflation expectation readings have been a bit more anchored in the NY Fed Survey and the Fed pays more attention to the Fed survey compared to the Michigan survey. Second, even though survey based inflation expectations have increased, market based measures of inflation expectations have absolutely collapsed. The 5 year forward 5 year inflation expectations have tanked from 2.35% at the start of the year to almost 2.0% now. Nonetheless, the Fed will have its eyes on both the survey based measures and the market based measures.   

14th Mar 2025

Key takeaway: Bad news all round! Consumer sentiment for the month of March declined from 64.7 to 57.9, according to preliminary estimates. Consumer Sentiment had generally been rising since mid 2024, but it had especially shot up after the US Presidential election in November. There was some divergence seen in the sentiment survey responses between Republican and Democratic affiliated respondents. After 5 continuous months of improvement, Consumer sentiment, as seen in the Michigan Consumer Survey, weakened a bit in January with the Index declining from 74.0 in December to 71.1 in January. The Index fell further in February to 64.7. The latest release for March shows now a further decline to 57.9. This is the lowest level since mid 2023! The Index of Consumer Expectations, declined from 64.0 to 54.2. The Current Economic Conditions Index decreased from 65.7 to 63.5. Consumer responses to the survey questions tend to be volatile and significantly influenced by current events, eg. pump prices, latest tariff threats, etc. Nontheless, the downward shift in consumer sentiment is notable. Yet, the most notable point of the latest release once again – similar to the last month – was the massive rise in inflation expectations. Year ahead inflation expectations soared further from 4.3% to 4.9%. This is the 3rd consecutive month of unusual +0.5% increases. The current reading is the highest since November 2022 and also well above the 2.3% to 3.0% range seen in the 2 years prior to the pandemic. Long run inflation expectations also rose further from 3.5% to 3.9% this month. The Fed pays close attention to the Michigan survey outcomes and this sharp rise is unwelcome news.  

7th Feb 2025

Key takeaway: Consumer Sentiment had generally been rising since mid 2024, but it had especially shot up after the US Presidential election in November. There was some divergence seen in the sentiment survey responses between Republican and Democratic affiliated respondents. After 5 continuous months of improvement, Consumer sentiment, as seen in the Michigan Consumer Survey, weakened a bit in January with the Index printing at 73.2 vs 74.0 in December 2024. However, the latest survey showed a sharper drop in February with the preliminary reading of the Index falling about 5% to 67.8. The previous month’s reading was also revised lower to 71.1 from 73.2.  The Index of Consumer Expectations, declined from 69.3 to 67.3. The Current Economic Conditions Index decreased from 74.0 to 68.7. Consumer responses to the survey questions tend to be volatile and significantly influenced by current events, eg. pump prices, latest tariff threats, etc. Nontheless, the downward shift in consumer sentiment is notable. Yet, the most notable point of the latest release was the massive rise in inflation expectations. Year ahead inflation expectations soared from 3.3% to 4.3%. Inflation expectations had sharply increased the previous month as well. However, the latest increase is massive and it is also quite unusual to see jumps of 1%. The current reading is the highest since May 2024 and also well above the 2.3% to 3.0% range seen in the 2 years prior to the pandemic. Long run inflation expectations also rose from 3.2% to 3.3% this month. The Fed pays close attention to the Michigan survey outcomes and this sharp rise is unwelcome news.  

10th Jan 2025

Key takeaway: Consumer Sentiment had generally been rising since mid 2024. The sentiment index improved further after the November elections, though there was some divergence seen in the sentiment survey responses between Republican and Democratic affiliated respondents. After 5 continuous months of improvement, Consumer sentiment, as seen in the Michigan Consumer Survey, weakened a bit with the Index printing at 73.2 vs 74.0 in December 2024. The Index of Consumer Expectations, declined from 73.3 to 70.2. The Current Economic Conditions Index increased from 75.1 to 77.9. The most notable point of the latest release was the sharp rise in inflation expectations. Year ahead inflation expectations soared from 2.8% to 3.3%. The current reading is the highest since May 2024 and also above the 2.3% to 3.0% range seen in the 2 years prior to the pandemic. Long run inflation expectations also rose from 3.0% to 3.3% this month. The Fed pays close attention to the Michigan survey outcomes and this sharp rise is unwelcome news.  

6th Dec 2024

Key takeaway: Consumer Sentiment, as seen in the Michigan Consumer Survey, improved for the 5th consecutive month. The Index of Consumer Sentiment printed at 74.0 which was its highest reading in 7 months. The Index of Consumer Expectations, on the other hand, declined from 76.9 to 71.6. The rise in consumer sentiment is mostly attributable to the continued lower inflation numbers that we have seen through most of 2024, the lower gas prices at the pump and the Republican sweep in the US elections. One of the notable outcomes of the latest Survey was the sharp rise in the Current Economic Conditions Index from 63.9 to 77.7. The increase was caused by a surge in buying conditions for Durable Goods. The rise is thought to be on account of the perception that purchasing durables now would enable buyers to avoid future price increases. One year inflation expectations increased sharply from 2.6% to 2.9%, the highest reading in 6 months. Long run inflation expectations remained relatively anchored just as they have been throughout the past couple of years. These expectations still remain elevated compared to the 2.2% to 2.6% range seen right before the pandemic. 

8th Nov 2024

Key takeaway: With 3-4 months of modest inflation prints, consumer sentiment – which had fallen in the initial half of 2024 – seems to be recovering back again or at the minimum seems to have bottomed out. However, the Index level remains far below pre-covid levels. The latest preliminary report for November showed a continuing trend with the Index rising for the 4th consecutive month. The index of consumer sentiment increased from 70.5 in October to 73.0 in November. Similarly, the Index of Consumer Expectations increased from 74.1 in October to 78.5 in November. On the other hand, the Current Conditions Index was mostly unchanged. Broadly, even though job numbers have been weak in recent months, lower inflation prints and the expectations of an easing monetary cycle have boosted consumer sentiment. One year inflation expectations decreased from 2.7% to 2.6%, the lowest reading since December 2020. Long run inflation expectations remained relatively anchored just as they have been throughout the past couple of years. These expectations still remain elevated compared to the 2.2% to 2.6% range seen right before the pandemic. 

11th Oct 2024

Key takeaway: With 3-4 months of modest inflation prints, consumer sentiment – which had fallen in the initial half of 2024 – seems to be recovering back again or at the minimum seems to have bottomed out. However, the Index level remains far below pre-covid levels. The latest preliminary report for October showed consumer sentiment was mostly sideways. The index of consumer sentiment dropped slightly from 70.1 in September to 68.9 in October. Similarly, the Index of Consumer Expectations decreased from 74.4 in September to 72.9 in October. Lastly, the Current Conditions Index also decreased a bit in October. Broadly, even though job numbers have been weak in recent months, lower inflation prints and the expectations of an easing monetary cycle have boosted consumer sentiment. The latest NFP number for September was surprisingly strong indicating a still decent labour market. Gas prices have also moderated in recent weeks, though the latest flare up in crude will increase the pressure on gasoline prices. One year inflation expectations increased back to 2.9% from 2.7% in September which was the lowest reading since December 2020. Long run inflation expectations remained relatively anchored just as they have been throughout the past couple of years. These expectations still remain elevated compared to the 2.2% to 2.6% range seen right before the pandemic. 

13th Sep 2024

Key takeaway: With 3-4 months of modest inflation prints, consumer sentiment – which had fallen in the initial half of 2024 – seems to be recovering back again. The preliminary report for September showed the index of consumer sentiment picked up from 67.9 in August to 69.0 in September. Similarly, the Index of Consumer Expectations increased from 72.1 in August to 73.0 in September. Lastly, the Current Conditions Index also increased a bit in September. Broadly, even though job numbers have been weak in recent months, lower inflation prints and the expectations of an easing monetary cycle have boosted consumer sentiment. Gas prices have also moderated in recent weeks. One year inflation expectations fell to 2.7%, the lowest reading since December 2020. Long run inflation expectations remained relatively anchored just as they have been throughout the past couple of years. These expectations still remain elevated compared to the 2.2% to 2.6% range seen right before the pandemic. 

16th Aug 2024

Key takeaway: Even though recent inflation prints have been softer than expected, the Consumer Confidence Index number have remained relatively subdued. The recent weaker economic growth prints and the rising unemployment rate in the economy are casting dark clouds over the consumer. The latest print of the Michigan Consumer Indexes showed a positive move up. The Index of Consumer Sentiment increased from 66.4 in Jul9 to 67.8 in August. Similarly, the Index for Future Consumer Expectations also increased from 68.8 in July to 72.1. The Current Conditions Index, on the other hand, declined a bit. The overall decline in the Michigan survey over the past few months also broadly matches a similar picture painted by the NFIB Small Business Optimism Index and The Conference Board Survey Index. One year and five year inflation expectations were relatively unchanged. Long run inflation expectations have been relatively anchored throughout the past couple of years. These expectations still remain elevated compared to the 2.2% to 2.6% range seen right before the pandemic. 

12th Jul 2024

Key takeaway: Even though the inflation number have come in softer for 3 months in a row, Consumer Index still remains subdued. One reason can be the recent weaker economic growth prints and the rising unemployment rate in the economy. The Index of Consumer Sentiment declined from 68.2 in June to 66.0 in July. Similarly, the Current Conditions Index and the Index for Future Consumer Expectations also declined a bit. The overall decline in the Michigan survey over the past few months also broadly matches a similar picture painted by the NFIB Small Business Optimism Index and The Conference Board Survey Index. With rate cut expectations having moderated in the last couple of months, consumer sentiment is likely to remain low. However, the latest mild inflation print for June and the growing expectations for a rate cut in September might boost sentiment back again. One year inflation expectations fell to 2.9%. This number is now once again inside the pre-pandemic range of 2.3% to 3.0%. Long run inflation expectations also edged lower from 3.0% to 2.9%. Long run inflation expectations have been relatively anchored throughout the past couple of years. These expectations still remain elevated compared to the 2.2% to 2.6% range seen right before the pandemic. 

14th Jun 2024

Key takeaway: Consumer Index has fallen sharply for 2 consecutive months. In a significant development, Consumer sentiment had cratered in the month of May to 67.4 from 77.2 in the previous month of April. The initial reading had been revised upwards from 67.4 to 69.1. The Index fell once again in June to 65.6. The sharp drop in the last couple of months is noteworthy. Economic news has mostly been negative in the recent months – higher inflation prints, job loss announcements, weaker job growth numbers, an increasing unemployment rate and a weak 1Q GDP print. All of these factors, coupled with the resultant interest rate uncertainty is making consumers nervous. It is key to also remember that even with the increases in the last 18 months (since the recent bottom in mid 2022), the current levels remain significantly below the typical levels seen in the 5-6 years before the pandemic. The Michigan survey also broadly matches a similar picture painted by the NFIB Small Business Optimism Index and The Conference Board Survey Index. With rate cut expectations having moderated in the last couple of months, consumer sentiment is likely to remain low.  The Index for Current Economic Conditions fell sharply as well from 69.6 to 62.5. Similarly, the Index for Consumer Expectations fell from 68.8 to 67.6. Inflation expectations which had also sharply fallen in recent months have also paused their downward trend. One year inflation expectations were unchanged at 3.3%.  This number is now once again well outside the pre-pandemic range of 2.3% to 3.0%. Long run inflation expectations also edged up from 3.0% to 3.1%. Long run inflation expectations have been relatively anchored throughout the past couple of years. These expectations still remain elevated compared to the 2.2% to 2.6% range seen right before the pandemic. 

14th Jun 2024

Key takeaway: In a significant development, Consumer sentiment cratered in the month of May to 67.4 from 77.2 in the previous month of April. This was the intial reading and the final reading is released closer to the end of the month. Nonetheless, the sharp drop of 13% in the Sentiment Index is noteworthy. Economic news has mostly been negative in the recent months – higher inflation prints, job loss announcements, a weak April NFP announcement and a weak 1Q GDP print. All of these factors, coupled with the resultant interest rate uncertainty is making consumers nervous. The Index for Current Economic Conditions fell sharply as well from 79.0 to 68.8. Simiarly, the Index for Consumer Expectations fell from 76.0 to 66.5. Inflation expectations which had also sharply fallen in recent months have also paused their downward trend. One year inflation expectations ticked up from 3.2% to 3.5%.  This number is now once again well outside the pre-pandemic range of 2.3% to 3.0%. Long run inflation expectations also edged up from 3.0% to 3.1%. Long run inflation expectations have been relatively anchored throughout the past couple of years. These expectations still remain elevated compared to the 2.2% to 2.6% range seen right before the pandemic. 

12th Apr 2024

Key takeaway: Consumer sentiment has mostly plateaued over the past couple of months and has been moving sideways. The headline Index was slightly lower at 77.9. Similarly the Index for Current Economic Conditions was slightly lower at 79.3 and the Index for Consumer Expectations was mostly unchanged at 77.0. Final Index numbers for the previous month of March were mostly higher than the preliminary readings released earlier in the month. While inflation has come down from the peak of 2022, the progress has stalled and that is weighing on sentiment. The increased geo-political risks and the increase in oil price have also been additional factors contributing to the stalling of sentiment. Inflation expectations which had also sharply fallen in recent months have also paused their downward trend. One year inflation expectations ticked up a bit to 3.1%.  This number is still roughly within the pre-pandemic range of 2.3% to 3.0%. Long run inflation expectations also edged up from 2.8% to 3.0%. Long run inflation expectations have been relatively anchored throughout the past couple of years. These expectations still remain elevated compared to the 2.2% to 2.6% range seen right before the pandemic. 

15th Mar 2024

Key takeaway: After a string of positive economic data including strong overall economic growth and moderating inflation, we hit a bit of a roadblock in January and February this year with hotter-than-expected inflation prints and lower-than-expected retail sales prints. Given this backdrop, consumer sentiment has mostly plateaued over the past couple of months. The headline Index was mostly unchanged at 76.5. However, the February Index print had been revised down from 79.6 to 76.9 in the final release for the month. Similarly the Index for Current Economic Conditions was unchanged at 79.4 and the Index for Consumer Expectations was slightly down from 75.2 in February to 74.6 in March. Inflation expectations which had also sharply fallen in recent months paused their downward trend in February and were relatively unchanged in March. One year inflation expectations were unchanged at 3.0%.  This number is still inside the pre-pandemic range of 2.3% to 3.0%. Long run inflation expectations also remained at 2.9%. Long run inflation expectations have been relatively anchored throughout the past couple of years. These expectations still remain elevated compared to the 2.2% to 2.6% range seen right before the pandemic. 

16th Feb 2024

Key takeaway: After 2 months of sharp increases, Consumer Sentiment was essentially flat in February. The headline Index was mostly unchanged at 79.6. Similarly the Index for Current Economic Conditions was unchanged at 81.5 and the Index for Consumer Expectations was slightly up from 77.1 in January to 78.4 in February. Remember that December and January had been rather spectacular on both fronts – economic data and market expectations. Inflation had come down swiftly, inflation expectations had moderated, yields climbed down from their 2023 highs causing mortgage rates to fall and the consumer seemed to be still spending. That spree was somewhat halted this week by higher than expected CPI and PPI data for January. Inflation expectations which had also sharply fallen in recent months paused their downward trend in February. One year inflation expectations increased slightly from 2.9% to 3.0%.  However, key to note that this number is still inside the pre-pandemic range of 2.3% to 3.0% and the Fed will definitely be taking this development into account. Long run inflation expectations also remained at 2.9%. Long run inflation expectations have been relatively anchored throughout the past couple of years. These expectations still remain elevated compared to the 2.2% to 2.6% range seen right before the pandemic. 

16th Feb 2024

Key takeaway: After 2 months of sharp increases, Consumer Sentiment was essentially flat in February. The headline Index was mostly unchanged at 79.6. Similarly the Index for Current Economic Conditions was unchanged at 81.5 and the Index for Consumer Expectations was slightly up from 77.1 in January to 78.4 in February. Remember that December and January had been rather spectacular on both fronts – economic data and market expectations. Inflation had come down swiftly, inflation expectations had moderated, yields climbed down from their 2023 highs causing mortgage rates to fall and the consumer seemed to be still spending. That spree was somewhat halted this week by higher than expected CPI and PPI data for January. Inflation expectations which had also sharply fallen in recent months paused their downward trend in February. One year inflation expectations increased slightly from 2.9% to 3.0%.  However, key to note that this number is still inside the pre-pandemic range of 2.3% to 3.0% and the Fed will definitely be taking this development into account. Long run inflation expectations also remained at 2.9%. Long run inflation expectations have been relatively anchored throughout the past couple of years. These expectations still remain elevated compared to the 2.2% to 2.6% range seen right before the pandemic. 

19th Jan 2024

Key takeaway: Consumer sentiment shot up for the second month in a row in January. The last 2 months have been rather spectacular on both fronts – economic data and market expectations. Inflation has come down swiftly, inflation expectations have moderated, yields have climbed down from their 2023 highs causing mortgage rates to fall and the consumer seems to be still spending. It not much of a surprise to see the consumer sentiment index shoot up massively 2 months in a row. The Index has gone from 61.3 in November to 78.8 in January. While there have been numerous occasions in the past when we have had false starts on an improving inflation scenario, the current scenario is the strongest possibility of a soft landing. The index for current conditions also improved sharply from 73.3 to 83.3. Similarly, the index of consumer expectations rose from 67.4 to 75.9. Both these indexes are significantly above 2022 lows, but still lower than pre-pandemic levels. Lastly, and perhaps most importantly, inflation expectations continued their sharp drop experienced in recent months. One year inflation expectations dropped further from 3.1% last month to 2.9% this month. This number is now inside the pre-pandemic range of 2.3% to 3.0% and the Fed will definitely be taking this development into account. Long run inflation expectations also dropped from 2.9% to 2.8%. Long run inflation expectations have been relatively anchored throughout the past couple of years. However, the figure of 2.8% was indeed outside the range of 2.9% to 3.1% seen in 26 of the last 30 months. These expectations still remain elevated compared to the 2.2% to 2.6% range seen right before the pandemic. 

8th Dec 2023

Key takeaway: After having fallen sharply for 4 months in a row, Consumer sentiment soared in the month of December. The Index for Consumer Sentiment improved a massive 13% from 61.3 to 69.4.While the consensus expectation was for the Index to improve, the outsized gain surprised everyone. While there have been numerous occasions in the past when we have had false starts on an improving inflation scenario, the current scenario is the strongest possibility of a soft landing and immaculate disinflation. The index for current conditions also improved sharply from 68.3 to 74.0. Similarly, the index of consumer expectations rose from 56.8 to 66.4. Both these indexes are significantly above 2022 lows, but still lower than pre-pandemic levels. Lastly, and perhaps most importantly, one year ahead inflation expectations dropped sharply from 4.5% last month to 3.1% this month. This number now stands at the door step of the pre-pandemic range of 2.3% to 3.0% and the Fed will definitely be taking this development into account. Long run inflation expectations also dropped from 3.2 to 2.8%. Long run inflation expectations have been relatively anchored throughout the past couple of years.  

11th Nov 2023

Key takeaway: Consumer sentiment slipped once again in the November’s preliminary reading. The headline sentiment index has fallen now for 4 months in a row. After a dismal 2022, consumer and consequently investor sentiment was up and rising through most of 2023. However, it seems to have levelled off in the past few months. Gas prices had been rising at the pump and inflation has been re-accelerating again. The recent geo-political tensions also weigh on consumer sentiment and expectations for the future. In this backdrop, it is a bit less surprising that the index has fallen from 63.8 in October to 60.4 in November. The index for current conditions also fell sharply again from 70.6 to 65.7. Similarly, the index of consumer expectations fell from 59.3 to 56.9. Both these indexes are also significantly off their 2023 mid summer highs, but still above 2022 lows. Lastly, and perhaps most importantly, one year ahead inflation expectations climbed up again (for a second month in a row) from 4.2% last month to 4.4% this month. While this development can be concerning, the consumer’s sentiment generally is quite volatile and influenced by short term developments. However, it is also key to note that long run inflation expectations also rose from 3.0 to 3.2%. Long run inflation expectations have been relatively anchored and any sustained breakout from the average range will be very concerning for markets and policy makers.  

13th Oct 2023

Key takeaway: Consumer sentiment slipped once again in the October preliminary reading. The headline sentiment index has fallen now for 3 months in a row. After a dismal 2022, consumer and consequently investor sentiment was up and rising through most of 2023. However, it seems to have levelled off in the past few months. Gas prices have been rising at the pump and inflation seems to be re-accelerating again. In this backdrop, it is a bit less surprising that the index has fallen from 68.1 in September to 63.0 in October. The index for current conditions also fell sharply from 71.4 to 66.7. Similarly, the index of consumer expectations fell from 66.0 to 60.7. Lastly, and perhaps most importantly, one year ahead inflation expectations climbed up from 3.2% last month to 3.8% this month. Long run inflation expectations continue to be anchored and this has been the evidence across all other consumer surveys as well.  

15th Sep 2023

Key takeaway: Consumer sentiment slipped in September similar to August, but again by a similar marginal amount. After a dismal 2022, consumer and consequently investor sentiment was up and rising through most of 2023. However, it seems to have levelled off in the past few months. Gas prices have been rising at the pump and inflation seems to be re-accelerating again. The uncertainty in today’s economic climate reflects in both – the consumer and the investor. In the same spirit, Michigan Consumer Sentiment Index was quite unchanged in September (67.7). The indexes of Current Conditions fell a meaningful 6 points from 75.7 to 69.8. The index for Future Expectations was relatively unchanged. 1 year ahead inflation expectations edged down from 3.5% to 3.1%. This number is falling within striking distance of the 2.3% – 3.0% range seen prior to the pandemic. However, any re-acceleration of inflation will take this number back up again. Similarly, long run inflation expectations came in at 2.7% which is below the recent range of 2.9% to 3.1%.  

11th Aug 2023

Key takeaway: The uncertainty in today’s economic climate reflects in both – the consumer and the investor. Economic data has mostly been posting sideways in the recent past which creates uncertainty about where the world in headed over the next few months. Over the past few days CPI and PPI had both registered prints in line with consensus. In the same spirit, Michigan Consumer Sentiment Index was quite unchanged in August (71.2). The other indexes of Current Conditions and Future Expectations were also relatively unchanged. The overall consumer sentiment had improved substantially since the resolution of the debt ceiling drama in June. However, we now seem to have plateaued. 1 year ahead inflation expectations edged down marginally from 3.4% to 3.3%. However, this number is still above 2.3% – 3.0% range seen prior to the pandemic. Similarly, long run inflation expectations still remain well anchored in the 2.9% to 3.1% range. But are still elevated relative to the 2.2% to 2.6% range seen prior to the pandemic. 

14th Jul 2023

Key takeaway: The Michigan Consumer Sentiment Index had registered a large drop in May – mostly attributable to the debt ceiling uncertainty and the continuing inflation story. However, June recorded a sharp rise back again in Consumer Sentiment. And that Sentiment Index further posted a significant gain in July. The Sentiment Index jumped from 64.4 in June to 72.6 in July. Apart from the resolution of the debt crisis and falling energy prices, the improvement in sentiment can also be attributed to the scaling back of inflation – which has been the key event over the past couple of months. The other indexes of Current Conditions and Future Expectations also improved substantially from June. The 1 year ahead inflation expectations at 3.4% was quite similar to June. Long term inflation expectations, on the other hand, remained range bound between 2.8% and 3.1%.

16th Jun 2023

Key takeaway: The Michigan Consumer Sentiment Index had registered a large drop in May – mostly attributable to the debt ceiling uncertainty and the continuing inflation story. However, June recorded a sharp rise back again in Consumer Sentiment. The Sentiment Index jumped from 59.2 in May to 63.9 in June. The rise back similarly can be attributed to the eventual resolution of the debt ceiling crisis as well as the overall scale back in energy prices. The other indexes of Current Conditions and Future Expectations also improved from May. However, the most notable point of the June preliminary release was the sharp drop in 1 year ahead inflation expectations from 4.2% in May to 3.3% in June. The current reading is the lowest since March 2021. Recent favorable inflation prints have been adding to the general positive and risk on sentiment – both with consumers and market participants. Long term inflation expectations, on the other hand, remained range bound between 2.8% and 3.1%.

12th May 2023

Key takeaway: The preliminary reading of the May Michigan Consumer Survey was key for several reasons. Firstly, the trend in consumer sentiment which was on an upswing since mid 2022 was broken by a relatively large fall. Consumer sentiment fell from 63.5 in Apr to 57.7 in May – back to the levels of May 2022. The read was also much lower than consensus expectations of 63.0. There can be a number of factors attributable to this fall including the continuing inflation pinch as well as the uncertainty around the US debt ceiling. It might be incorrect to read too much into just one data point – but nonetheless, it is something that markets and policy makers will take note of. Similarly, the Indexes for Consumer Expectations (future business expectations) and Current Conditions also dived from previous months. While the one year ahead inflation expectations decreased slightly from 4.6% to 4.5%, it was still range bound similar to recent months. However, medium term inflation expectations (5 year) recorded a decent rise from 3.0% to 3.2%. 5 year inflation expectations had been fairly range bound in the 2.8% to 3.0% range and once again this is the first time since mid 2022 that the inflation expectations index has broken outside the 3% range.

14th Apr 2023

Key takeaway: Consumer sentiment was quite unchanged in Apr from Mar. Sentiment, in Mar, had fallen for the first time in the previous 4 months from 67.0 in Feb to 62.0 in Mar. This number remained relatively unchanged in the preliminary reading for April. It is interesting to note that this comes on the back of the SVB episode. Given the strength in the labor market, sentiment still remains significantly higher than 2022 lows. One year ahead inflation expectations rose significantly from 3.6% in Mar to 4.6% in April. While this large increase is concerning, the short run inflation expectations have been volatile and bounced around month to month. The latest Michigan reading though is also similar to the recently released NY Fed Consumer survey which had also shown a large increase in short run inflation expectations. Long run inflation expectations still remained fairly range bound within the tight range of 2.9% to 3.1% seen in the recent past. They still remain high compared to the pre-pandemic range of 2.3% – 2.6%.

17th Mar 2023

Key takeaway: Consumer sentiment fell for the first time in the past 4 months from 67.0 in Feb to 63.4 in Mar. What is key to note is that this drop in sentiment was recorded mostly before the SVB and ongoing banking turmoil. Nonetheless, even with the drop, consumer sentiment remained well above last year’s lows. One year ahead inflation expectations fell from 4.1% in Feb to 3.8% – the lowest reading since Apr 2021. Long run inflation expectations also broke slightly (2.8%) from the tight range of 2.9% to 3.1% seen in the recent past. They still remain high compared to the pre-pandemic range of 2.3% – 2.6%.

10th Feb 2023

Key takeaway: The Michigan Consumer Sentiment Data for Feb was a non-event. Well, almost. None of the indexes (consumer sentiment, current conditions or expectations) registered much of a change. However, the key point to note was that the year ahead inflation expectations bounced back up to 4.2% from 3.9% in Jan. Recall that the one year forward inflation expectations fell from 4.4% in Dec to 4.0% in Jan – a decline of 4 consecutive months.The Fed pays close attention to inflation expectations – both short term and long term. And hence a move in expectations is important. Long run inflation expectations though still remain well anchored in the 2.9% – 3.1% range – while still inflated compared to the 2.2%-2.6% range seen in the 2 years prior to the pandemic.

13th Jan 2023

Key takeaway: The Index of Consumer Sentiment jumped a substantial 5 points from 59.7 in Dec to 64.6 in Jan. Even though this number is still low compared to historical standards, it is a substantial jump nonetheless. Like I mentioned earlier, the resiliency of the US consumer has been a big thorn in the Fed’s path over the past year and to that extent the Fed does not like to see a substantial improvement in this number – at least in the present environment. But when coupled with the decline in near term inflation expectations and the recent soft retail sales number, a rise in the sentiment index becomes much more palatable to an inflation focused Fed. And inflation expectations on a forward 1 year basis have been moving sharply down. The one year forward inflation expectations fell from 4.4% in Dec to 4.0% in Jan – a decline of 4 consecutive months. Long term inflation expectations inched up slightly to 3.0% from 2.9%. But they have been in this narrow range for multiple months now, while still inflated compared to the 2.2%-2.6% range seen in the 2 years prior to the pandemic.

9th Dec 2022

Key takeaway: The Fed pays close attention to the Michigan Consumer Survey (among other such surveys of consumer behavior) and this has been clearly expressed by the Chair multiple times. While the sentiment index itself fluctuates widely since it is closely tied to gas prices at the pump, it also contains other clues to consumer’s expectation of inflation in the short, medium and long term. With the massive rate hiking cycle, consumer expectations of 1 year ahead inflation have been trending considerably down. Similarly, medium and long term expectations have been quite rangebound. This has been substantiated even in the recent NY Fed surveys. The sentiment index rose from 56.9 in November to 59.1 in December. The resiliency of the US consumer has been a big thorn in the Fed’s path over the past 9 months and to that extent the Fed does not like to see a substantial improvement in this number. But when coupled with the decline in near term inflation expectations and the recent soft retail sales number, a rise in the sentiment index becomes much more palatable to an inflation focused Fed.     

11th Nov 2022

Key takeaway: The Michigan Consumer Sentiment Index is closely tied to gas prices at the pump. With the recent rise in pump prices in October, it was not surprising to see the Consumer Sentiment Index drop from 58.9 to 54.7 – although it is indeed a bit of a steep drop. Similarly the index for current economic conditions fell as well. But the most important point of today’s release was the tick back up the long-run inflation expectations from 2.9% to 3.0%. To be clear, this number has remained in this range for some time now. Any break out from this range to the upside or downside would be a meaningful development. One year ahead inflation expectations also ticked higher from 5.0% to 5.1%. The Fed pays especially close attention to this survey’s results to gauge any signs of de-anchoring of inflation expectations. The rise in inflation expectations over the medium and long term was also seen in the recent NY Fed Consumer surveys.    

14th Oct 2022

Key takeaway: Once again, the Michigan Consumer Index is closely tied to gas prices at the pump. With the recent levelling off in pump prices, it was not surprising to see the Consumer Sentiment Index tick up a bit from 58.6 to 59.8. Similarly the index for current economic conditions improved as well. But what was slightly more concerning was median expected 1 year ahead inflation rate rose from 4.9% to 5.0%. Long run expectations which had declined in the previous months surveys also inched up. Like I had mentioned before, the Fed pays close attention to this survey’s results and they wont like what they see. The rise in inflation expectations over the medium and long term was also seen in the recently released NY Fed Consumer survey.    

16th Sep 2022

Key takeaway: This month’s Michigan Consumer survey findings were a non-event. Well, almost! We know that US consumer sentiment is closely tied to gas prices at the pump and gas prices have fallen since the June highs. So it is no surprise that consumer sentiment has steadily gotten better. The Index was kind of unchanged in September. Inflation expectations amongst consumers has fallen as well. Remember that the FOMC does focus a lot on the UMich Survey and they will still be relived to see long run expectations well anchored (in fact they fell to 2.8% – thats below the 2.9% to 3.1% range since July 2021). The U Mich Survey results were quite similar to the NY Fed Survey of Inflation expectations that came out a few days earlier. However, as inflation takes a bite out of everyone’s paycheck, people are also starting to expect home prices to fall and their ability to repay debt to come under pressure!   

12th Aug 2022

Key takeaway: US consumer sentiment is closely tied to gas prices at the pump. So it is no surprise that consumer sentiment got a big boost in July. But this reading becomes important because of other factors as well. First of all, because this comes on the back of very positive news over the last couple of weeks on both inflation as well as corporate earnings. The important NY Fed’s Survey of Consumer Expectations, just a few days back, also showed a big improvement in consumers’ outlook on inflation. Even the 5 year 5 year forward inflation rate moderated from a high of 2.67% in mid April to 2.09% in late July.   

15th Jul 2022

Key takeaway: The US consumers’ opinions and expectations conveyed through the Michigan survey have special importance in macro context these days. Chair Powell had specifically referenced the Michigan survey in his last FOMC meeting comments. Even though the readings for the survey remain close to or at all-time lows, there were some positives from this report. The most important being toning down of consumers’ inflation expectations. The survey showed consumers expect inflation to run at 2.8% over a five-year period, the lowest in a year and down from 3.1% in June. Their one-year outlook for price increases moderated to 5.2% from 5.3% a month earlier and was the lowest since February 2022. At the same time, while this is some relief, it does not take 75 basis points off the table for the July Fed meeting.   

10th Jun 2022

Key takeaway: The Consumer Sentiment time series chart is a must see today. The sentiment index is the lowest since 1980! There are a couple of more points to note though in this index of sentiment gloom. First, we always have to recognise that sentiment is heavily influenced by current circumstances (i.e. the war, inflation, etc) and can change with changing circumstances. But second and more important, consumers’ expectations of inflation in one year as well as over the next 5 years is changing. The Fed relies heavily on expectations being anchored and believes that has been a key attribute of successful inflation control in the post Volcker era.  

13th May 2022

Key takeaway: Recall the Michigan Consumer Sentiment index had  unexpectedly improved in April. We had stated then that it was too early to state that consumer confidence is on an upswing with just a one month move. True to that assessment, the consumer sentiment index is back down significantly. At 59.1, it is the lowest since 2011. Right now, the only thing that stands between us and a recession is the US consumer. And hence consumer sentiment is such an important indicator of things to come. And, as mentioned before, the Fed keeps a close eye on this metric of the Consumer Survey. 

14th Apr 2022

Key takeaway: The Consumer Sentiment index unexpectedly improved in April. Too early though to state that consumer confidence is on an upswing. But more importantly, consumer expectations of longer term inflation still remained well anchored. And the Fed does keep on eye on this metric of the Consumer Survey. 

11th Mar 2022

Key takeaway: The Consumer Sentiment Index reading at 59.7 was the lowest since 2011. The Current Conditions Index at 67.8 was the lowest since 2009. The measure for Consumer Expectations was 54.4, lowest since 2011. Overall, pretty gloomy numbers. Two things to note – First, the war situation and spiking oil prices does play into the expectations in the survey – so lower numbers can be expected. Second, and importantly, if these index readings stay low going forward, it can very well be a leading indicator of a worsening economy.

University of Michigan Consumer Survey