Consumer Sentiment

RECENT NEWS
Wall Street Journal  Apr 28  Comment 
Consumer sentiment about the U.S. economy remained high in April, even as the Commerce Department said U.S. economic output increased at the slowest pace in three years.
SeekingAlpha  Apr 28  Comment 
Clusterstock  Apr 24  Comment 
It turns out the news media isn’t fake after all. Financial news headlines are proving a useful measure of broad economic sentiment for forecasters seeking to deepen their arsenal of data, according to a new report from the Federal Reserve...
Reuters  Apr 13  Comment 
The number of Americans filing for unemployment aid unexpectedly fell last week and consumer sentiment rose early this month amid continued optimism over household finances, suggesting a sharp slowdown in job growth in March was an aberration.
MarketWatch  Apr 13  Comment 
A gauge of consumer sentiment rose in April to 98 compared with March’s final result of 96.9, the University of Michigan said Thursday.
SeekingAlpha  Apr 13  Comment 
Wall Street Journal  Mar 31  Comment 
Consumer sentiment about the U.S. economy remained high in March because of higher incomes and favorable job prospects, but it was also buoyed by a view that lower economic growth is the new normal, a University of Michigan report said.
MarketWatch  Mar 31  Comment 
Most Americans are optimistic about U.S. economy.
MarketWatch  Mar 31  Comment 
Final reading of March consumer sentiment lowered a touch




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Consumer sentiment is the measurement of consumers' attitudes towards their financial positions and the present situation as well as expectations of the economic conditions.[1] Similar to consumer confidence, consumer sentiment is directly related to consumer spending. Since consumer spending accounts for almost two-third of U.S GDP, the level of consumer sentiment then becomes a key indicator to gauge the health of the economy.

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Consumer Sentiment [2]

Measures of consumer sentiment

Michigan Consumer Sentiment Index (MCSI)

Consumer sentiment is measured using the Michigan Consumer Sentiment Index (MSCI). The report is released twice a month from data collected from telephone surveys conducted with 500 U.S consumers. The survey is carried out by the University of Michigan and queries in the survey include consumers' financial situation and attitudes about the economy. Approximately 60% of total survey results are released in the preliminary report on the 10th of each month whereas the final report for the prior month is released on the first of the month.[3]

Why is it important?

The pattern in consumer attitudes has the foremost influence on both the stock and bond markets. Consumer sentiment figure impacts the stock market positively when sentiment is up, and negatively when sentiment is down. The industry that is most affected by consumer sentiment is the retail industry, as their profits are directly affected by consumer spending. In 2007, the credit crunch and spiking gasoline prices drove down consumer sentiment to record lows. However, as the index began to increase again in 2008, it helped investors to confirm that the economy is easing out of recession.[4]

See also: Consumer Confidence

References

  1. ForexForum: Forex Glossary
  2. Iacono Research
  3. Investopedia: Michigan Consumer Sentiment Index
  4. Econoday: 2010 Economic Calendar


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