The University of Michigan’s Index of Consumer Sentiment is one of two monthly US consumer sentiment indices, the other being the Conference Board’s Consumer Confidence Survey. It covers personal finances, business conditions and buying conditions. As private consumption accounts for a majority of GDP growth in advanced economies, consumer sentiment surveys present a picture of the economy well in advance of official reports.
However, as leading indicators, they are only as useful as other widely available data.
The latest survey conducted by the university indicates US consumers think employment and pay prospects look favourable but, at the same time, various trade disputes present a potential drag on the US economy and the possibility of higher inflation. The net result was a fall in the index from 98.2 in June to 97.1 in July, which is about the same as the average of the previous twelve months and considerably more optimistic than the long-term average (see chart below).