What consumer confidence measures
Consumer confidence is a survey reading of how households feel about the economy, their jobs and their finances. Consumer spending is a large part of US output, so traders watch these surveys as an early hint of future spending. Hard data such as retail sales and GDP arrive later.
There are two main US surveys:
- The Conference Board Consumer Confidence Index
- The University of Michigan Index of Consumer Sentiment, often called "Michigan sentiment"
Both are opinion surveys, not spending data. A household can report low sentiment and still spend normally. This is why markets treat these surveys as secondary to CPI or non-farm payrolls.
- GDP, retail sales or PMI come out stronger than expected.
- The economy looks healthier and companies are expected to earn more.
- Foreign investors want the country's stocks and bonds; rate cuts look less likely.
- The currency tends to firm; weak data usually works the other way.
Ready to try it on a real or demo account?
Partner link · trading carries a high risk of loss
Conference Board vs University of Michigan
| Conference Board | University of Michigan | |
|---|---|---|
| Headline | Consumer Confidence Index | Index of Consumer Sentiment |
| Sub-indices | Present Situation, Expectations | Current Conditions, Consumer Expectations |
| Main focus | Labour market and business conditions | Personal finances, prices, buying conditions |
| Releases | Once a month | A preliminary reading, then a final reading later in the month |
| Inflation data | Inflation expectations question | Year-ahead and long-run inflation expectations, closely followed |
The Conference Board survey leans towards jobs. Its "labour differential" compares how many people say jobs are plentiful with how many say jobs are hard to get. Traders read it next to unemployment data and jobless claims.
The Michigan survey leans towards prices and household finances. Gasoline prices, stock market moves and news coverage can shift its readings quickly.
The inflation expectations component
Michigan's inflation expectations figures often move markets more than its headline index. They show what households expect prices to do over the year ahead and over the long run.
Here is why this matters. Central banks worry that if people expect high inflation, they will act on it. They may push for higher wages or buy goods early, and that can keep inflation high. A rise in long-run expectations can make the Federal Reserve more cautious about cutting rates. A fall can ease that concern. Fed officials sometimes mention these surveys, so see hawkish vs dovish and the Federal Reserve page.
Note that the preliminary Michigan reading is often revised in the final release. A large revision can cause its own market reaction.
How markets typically react
Markets react to the surprise, meaning the gap between the actual figure and the consensus forecast. They do not react to the level of the index. See economic surprises.
The usual pattern, which does not always hold:
- Stronger confidence or higher inflation expectations: Treasury yields often rise and the US dollar often firms. Rate-sensitive assets such as gold may come under pressure.
- Weaker confidence or lower inflation expectations: yields and the dollar may ease. Stock indices can move either way, depending on whether the market focuses on growth or on rates.
The reaction is often brief. It can fade or reverse if other data comes out the same day. It is also usually smaller than for CPI or payrolls. Spreads can widen around any release, and leveraged CFD and forex positions can lose money fast in these moments.
Release dates and official data
Take release dates from official sources, the Conference Board and the University of Michigan Surveys of Consumers. You can also use an economic calendar that lists them, including the time of release. For figures, use the official publications rather than reposted numbers, because Michigan's preliminary and final readings are easy to mix up.
For the wider picture, see fundamental analysis and recession indicators.
Frequently asked questions
Is consumer confidence the same as consumer sentiment?
They measure similar things. "Consumer confidence" usually refers to the Conference Board index. "Consumer sentiment" usually refers to the University of Michigan index.
Which survey moves markets more?
It varies. Michigan's inflation expectations draw attention when inflation is the market's main concern. The Conference Board's labour questions matter more when the focus is on jobs.
Why can the two surveys disagree?
They use different questions, samples and methods. Michigan's survey is more sensitive to prices, and the Conference Board's survey is more sensitive to the job market.
Do these surveys predict recessions?
Sharp falls have sometimes come before downturns, but they also give false signals. Read them together with hard data.
Where do I find the release time?
Check the official release calendars of the Conference Board and the University of Michigan, or a reliable economic calendar.