University of Michigan United States Consumer Expectations

University of Michigan Consumer Expectations demonstrate how US consumers estimate their financial and economic prospects for the next 12 months. The index is calculated monthly based on a telephone survey of at least 500 US households, which the University of Michigan conducts to calculate five different indices, including this one.

Respondents are polled to express their opinion on the following questions:

• Whether respondents estimate their families' financial conditions to become better or worse a year from now
• Whether business conditions in the next 12 months will become better or worse
• - Whether respondents expect stability or growth of unemployment or depression.

Answers to these questions are calculated as follows: the percentage of negative values is subtracted from positive ones, and 100 is added to the resulting value. The resulting values ​​are added up and divided by 4.1134 (the benchmark value), after which 2 (the correction constant for the sample composition) is added to the resulting figure.

The University of Michigan Consumer Expectations index allows evaluating how US households plan their life for the next few years. Bureau of Economic Analysis of the US Department of Commerce includes it in the index of leading indicators, which is the confirmation of the index representativeness and importance.

Lower readings may be a consequence of unfavorable current conditions and also predict a decline in future consumer activity: people may begin to spend less and save more, thus withdrawing money from active economy. Higher readings indicate that people are confident in the economy health and suggest that the consumer activity will be preserved. This may affect US dollar quotes positively.