University of Michigan Consumer Sentiment Index

The University of Michigan Consumer Sentiment Index ( MCSI, consumer confidence index from the University of Michigan ) measures the propensity of households in the United States. It is published by Thomson Reuters and the University of Michigan. The index is in competition with the Consumer Confidence Index, the Consumer Confidence Index The Conference Board.

Concept

The University of Michigan Consumer Sentiment Index ( MCSI ) is considered a leading indicator of economic development in the United States. To calculate a representative sample of 500 consumers become their personal finances, general business climate and their consumption plans, especially in the propensity of durable consumer goods, interviewed. In the monthly report, the Surveys of Consumers, the trust is measured, which have private households in the performance of the American economy. Consumer confidence is considered a key indicator of consumer spending, which account for about two-thirds of U.S. economic output.

The survey consists of five questions on the following topics:

Survey respondents are given the opportunity to freely respond to questions, the examiner has more clues classify the answers. From all the data to calculate Thomson Reuters and the University of Michigan two sub-indices, which together form the overall index: the Current Conditions Index for the assessment of the current situation and the Index of Consumer Expectations, which includes an assessment of future expectations. Opinions on current behavior for a share of up to 40 percent of the overall index, expectations for future behavior accounts for 60 percent.

Specific research criteria are also:

• Expected inflation in one year and in five years
• Expected unemployment
• Expected interest
• Satisfaction with the government's economic policy

The preliminary results from the surveys of Consumers are published around the 15th of the month; finally to the last business day of the month at 10:00 clock EST (16:00 CET clock ).

Assessment

Consumer confidence in the U.S. is closely correlated with unemployment, inflation and the real income situation. There is a strong connection with the consumer behavior. However, the sizes do not necessarily reflect.

One of the strengths of the University of Michigan Consumer Sentiment Index ( MCSI ) is publishing the data for the current month. Consumer confidence is a leading indicator of economic cycles. The information published provide information on the current situation and future expectations of the consumers.

Among the weaknesses of the index heard that the consumer does not have the necessary information to make a correct estimate of the income as the job growth in advance. The monthly report contains information on planned spending, but which are not necessarily made.

In a period of prolonged economic growth with the purchase intentions can lose weight despite falling unemployment, since the strong demand has already been satisfied. In contrast, in the short term may increase with rising inflation, the buying plans, as consumers put in anticipation of rising prices this quickly to avoid the price increase.

The financial markets are sensitive to unexpected changes in the index, it is perceived as an early indicator for economic development as well as looming inflation. MCSI and Purchasing Managers Index include also such as the Case-Shiller index, the FHFA House Price Index or the price of oil to the group of indicators that influence their development recognized the equity indices.

In addition to the MCSI there are in the U.S., two consumer confidence indices: Consumer Confidence Index The Conference Board Consumer Comfort Index ABC News and the Washington Post. While the question of the Conference Board focuses on the labor market situation in the other indices, the financial situation of households is at the center. In contrast to consumer confidence The Conference Board at MCSI are no regional indices are available.

History

Historical Overview

The University of Michigan Consumer Sentiment Index ( MCSI ) was developed in the 1940s by the economist George Katona. From November 1952 until the end of 1977, the index was published quarterly and monthly as of January 1978. Underlying are 100 points in February 1966. Since January 2007, calculate the University of Michigan together with the Reuters news agency the index. The long-time average of the time series of the MCSI 1952-2007 is 88.5 index points. The average from 2008 to 2012 is 69.2 index points. The average of the entire time series from 1952 to 2012 is 86.8 index points.

During the oil crisis in the 1970s, the index declined for the first time under the limit of 60 points. In February 1975, he scored a low of 57.6 points. His all-time low was marked by the index during the recession of the early 1980s. In May 1980, a record low of 51.7 points was determined.

In January 2000, the MCSI reached an all-time high of 112.0 points. During the financial crisis of 2007, the unemployment grew in the U.S. and the real income declined. Accordingly, the consumer confidence fell in November 2008 to a low of 55.3 points. With the recovery of the U.S. economy and the index rose. In February 2011 a value of 77.5 points was determined.

In August 2011 the consumer confidence fell to 55.7 points and thus on the fourth-lowest level since the data series in November 1952. Only the April 1980 with 52.7 points, 51.7 points in May 1980 and November 2008, 55, 3 points were a little deeper. According to statements by the chief economist Professor Richard Curtin, director of consumer research, signaled such deep levels in the past recession.

In November 2012, the index rose to 82.7 points, the highest level since September 2007.

For the month of December 2012, a value of 72.9 points was determined.

Best and worst months

The table shows the months with the highest and lowest value of the University of Michigan Consumer Sentiment Index since 1952.

Annual development

The following table shows the annual high-low and closing prices as well as the annual average of the University of Michigan Consumer Sentiment Index since 1952.

¹ December 31, 2012