Preface
Did you notice that there will be a key data released at the end of the month – The University of Michigan Consumer Sentiment Index? What is the University of Michigan Consumer Sentiment Index? How does it affect us? Do you know how important it is?
What is the University of Michigan Consumer Sentiment Index?
In order to study the impact of consumer demand on the economic cycle, the Survey Research Center of the University of Michigan compiled the Consumer Confidence Index.
The report is based on survey results of approximately 500 to 600 adult consumers, not only calculates a seasonally adjusted index of consumer confidence, but also current conditions (including financial and purchasing conditions) and expectations (including expected financial and economic conditions for the next 1 and 5 years). The University of Michigan Confidence Index is mainly to understand the degree of consumer confidence in the economic environment, but also reflects consumers’ views on the current economic situation and future economic prospects, income levels, and income expectations. It is a leading indicator for predicting economic trends and consumption trends.
The University of Michigan’s confidence index provides a valuable guide for observing changes in consumer attitudes, which in turn can better predict consumer behavior. In addition, the University of Michigan’s confidence index data is less volatile and more stable than other data for similar purposes. The University of Michigan’s Consumer Confidence Index has a stronger correlation with consumer spending than the Conference Board’s Consumer Confidence Index.
The Impact of the University of Michigan Consumer Confidence Index
The rise in the consumer confidence index indicates that consumers have a strong willingness to consume goods and services, which is conducive to economic expansion;
On the contrary, the fell in the consumer confidence index indicates that consumers’ willingness to spend is not high, and the possibility of economic slowdown increases.
As a result,
if the consumer confidence index higher than expected, then US dollar inclines;
if the consumer confidence index lower than expected, then US dollar declines.
Announcement time
The initial value is announced on the second Friday of each month, while the final value is announced on the fourth Friday of each month.
However, the initial value usually has a large impact to the market.
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