The University of Michigan Consumer Sentiment (MCSI) is an index is based on a survey of personal consumer confidence in economic activity
Consumer optimism is directly related to consumer spending, which makes up a large part of a country’s economic activity.
Consumer sentiment can foreshadow the cyclical turning points in the economy.
The Index was created and 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
Why is it important?
it gauges consumer attitudes on their financial and income situations.
Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future.
The more optimistic that consumers feel about the economy and their own personal finances, the more likely they are to spend.
With this in mind, it’s easy to see how this index of consumer attitudes gives insight into the direction of the economy.
Economists and analysts look to this survey over the Conference Board’s Consumer Confidence Index for an early clue on the NFP.
This is because the data includes interviews conducted up to a day or two right before the official release.
This makes it a good real-time measure of consumer mood.
According to the University of Michigan, the surveys “have proven to be an accurate indicator of the future course of the national economy.”
How to read it?
Also referred to as the Index of Consumer Sentiment (ICS), the report created by the University of Michigan’s Consumer Survey Center that measures consumer optimism regarding the US economy.
Each month, 500 households are telephoned and surveyed on their financial conditions and attitudes about the economy. Fifty core questions are asked.
They are asked about their view on three things:
- Their own financial situation
- The short-term general economy
- The long-term general economy
Consumer sentiment is directly related to the strength of consumer spending.
Consumer confidence and consumer sentiment are two ways of talking about consumer attitudes.
Among economic reports, consumer sentiment refers to the Michigan survey while consumer confidence refers to The Conference Board’s survey.
The Michigan index is almost identical to the Conference Board Consumer Confidence index, though there are two monthly releases, a preliminary and final reading.
Like the Conference Board index, it has two subindexes: expectations and current conditions. The expectations index is a component of the Conference Board’s Leading Indicators index.
Where to find it?
On BabyPips.com’s economic calendar, you can find its event listing.
The index figures are published twice a month consisting of a preliminary release mid-month and a final report at month’s end.
What time is it released?
The preliminary release is at 10:00 am ET on the second Friday of each month
The final release is at 10:00 am ET on the fourth Friday of each month.
