Consumer Sentiment Index

This chart plots the University of Michigan Index of Consumer Sentiment, monthly, over the last ten years, from the FRED series named under the chart. It is a survey, not a market price: several hundred households are asked how their finances are, what they expect, and whether now is a good time to buy. The page refreshes hourly from the live data and shows the current reading with the trailing 90-day change.

Sentiment matters because the consumer is the bulk of the US economy, and households that expect worse times spend like it — deferring cars, appliances and holidays before any pay cheque actually shrinks. A sustained fall here has historically preceded slower consumption with a lag of a few months; a recovery in sentiment usually leads the recovery in spending the same way.

For US markets the informative readings are the extremes and the divergences. Deep pessimism has often marked the late stages of a downturn rather than its beginning — households are best at describing the present. And sentiment diverging from the hard data, in either direction, tells you the gap that the next few months of spending will close.

The caveats: this is soft data — what people say, not what they do, and the two have diverged for long stretches in recent years. The index is monthly, revised between its preliminary and final prints, and increasingly split along partisan lines, which adds noise the old readings did not carry. Read it as a mood ring, not a measurement of the economy itself.