Consumer Sentiment: Final Result for July 2017

The University of Michigan's Index of Consumer Sentiment (ICS) - Final Result for July 2017 was released today:

Predicted: 93.1
Actual: 93.4

• Change from Last Month: -1.788%

• Change from 12 Months Ago: +3.778%

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From today's report:

"...Consumer confidence remained largely unchanged at the same favorable level recorded at mid-month. The overall Sentiment Index has declined by 5.1 Index-points since the January peak, which was the highest figure in a dozen years. The relatively small decline still left the Sentiment Index higher in the first seven months of 2017 than in any other year since 2004. The size of the decline was tempered by record favorable views of Current Economic Conditions, which rose to its highest level since July of 2005. These gains were mainly due to improvements in consumers' personal finances. At the same time, consumers expressed less optimism about future prospects for the overall economy and for their own personal finances. The Expectations Index fell from 90.3 in January to a still positive 80.5 in July; if it continues to decline by another 10 points in the second half of 2017, the loss would become more worrisome. Moreover, while current conditions were judged strictly on the performance of the economy, expectations continue to be significantly influenced by partisanship: the difference on the Expectations Index between Democrats and Republicans was 45 Index-points (63.7 versus 108.7); among Independents, in contrast, the Expectations Index was exactly equal to the weighted difference between the partisan extremes (80.5). Importantly, the partisan gap has narrowed in the past six months, mostly due to Republicans tempering their optimism. The recent declines among Republicans were somewhat predictable, but the maintenance of extreme pessimism among Democrats is more surprising..."

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The ICS is derived from the following five survey questions:

1. "We are interested in how people are getting along financially these days. Would you say that you (and your family living there) are better off or worse off financially than you were a year ago?"
   
   
   
2. "Now looking ahead, do you think that a year from now you (and your family living there) will be better off financially, or worse off, or just about the same as now?"
   
   
   
3. "Now turning to business conditions in the country as a whole, do you think that during the next twelve months we'll have good times financially, or bad times, or what?"
   
   
   
4. "Looking ahead, which would you say is more likely: that in the country as a whole we'll have continuous good times during the next five years or so, or that we will have periods of widespread unemployment or depression, or what?"
   
   
   
5. "About the big things people buy for their homes, such as furniture, a refrigerator, stove, television, and things like that. Generally speaking, do you think now is a good or bad time for people to buy major household items?"
   
   

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• Click here for more on how the ICS is calculated.

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The ICS uses a 1966 baseline, i.e. for 1966, the ICS = 100. So any number that is below the 1966 baseline of 100 means that the folks who were polled recently aren't as optimistic about the U.S. economy as the sample that was polled back in 1966.

The ICS is similar to the Consumer Confidence Index in that they both measure consumer attitudes and offer valuable insight into consumer spending.

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The "predicted" figure is what economists were expecting, while the "actual" is the true or real figure.

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Last month's final ICS reading was 95.1.

• Click here to view the full University of Michigan report.

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