Consumer Sentiment Doesn’t Matter
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
Why don’t they do what they say? Say what they mean?
These were the burning questions asked by the British “new wave” band the Fixx on its 1983 hit “One Thing Leads to Another.” The song was allegedly written as an indictment of dishonest politicians. But I’ve grown convinced that they were talking about responders to the University of Michigan Consumer Sentiment survey.
This monthly telephone survey asks roughly 600 adult Americans dozens of questions related to how they feel about the economy. The answers are aggregated into a simple index – the widely-watched University of Michigan Consumer Sentiment Index (MCSI).
If your day includes a steady diet of market and economic news, you’re likely familiar with the MCSI. And if you have market-savvy clients, they’re likely reading (and wondering) about it too. MCSI results are regularly reported and analyzed on social media by popular market commentators like Mohamed El-Erian, Creative Planning’s Charlie Bilello, and Charles Schwab’s Liz Ann Sonders, to name just a few.
The MCSI is considered an important leading economic indicator. After all, roughly two-thirds of the U.S. economy consists of consumer spending. You would think that insight into how consumers are feeling about the economy and their personal finances would be useful information. But that depends…