University of Michigan Consumer Confidence in United States

This is the University of Michigan's consumer confidence index, similar to the Conference Board's but with a different methodology. It comprises two sub-indices, one on the current situation and another on expectations for the coming months, and is released as a preliminary and a final estimate each month.

It is compiled from a monthly telephone survey of a sample of households considered representative of the United States, with a questionnaire focused on personal finances, buying conditions and the economic outlook. The results are combined into an overall confidence index and its two components.

Consumption accounts for more than two thirds of US GDP, which is why markets follow household confidence closely. The greater the confidence in the economy and in personal finances, the more likely spending is to rise, so it is regarded as a good indicator of the economy's direction. The survey also includes inflation expectations, which are closely watched by the Federal Reserve.

Being a survey, it shares the usual limitations of the method -sample size, representativeness and statistical variability-. In addition, the preliminary estimate is revised in the final reading, so any single figure should be treated with caution, and sentiment does not always translate into actual spending.