Latest news with #IndexofConsumerSentiment
Yahoo
17-05-2025
- Business
- Yahoo
What is consumer confidence, and why does it matter?
Experts use several metrics to gauge the health of the U.S. economy, including gross domestic product (GDP), unemployment, inflation, and consumer confidence. Consumer confidence measures how optimistic or pessimistic consumers feel about the overall state of the economy and their own finances. It's important because it reflects people's willingness to spend money, which is a key driver of economic growth. And this figure has far-reaching implications — it can influence stock prices, business decisions, and economic policies. Learn more about how consumer confidence is tracked and why it matters. This embedded content is not available in your region. Consumer confidence is an economic indicator that measures how consumers feel about the health of the economy and their personal financial situation. When consumer confidence is low, it indicates greater economic uncertainty among individuals. As a result, they tend to cut back on discretionary spending and focus on saving instead. On the other hand, when consumer confidence is high, people are more likely to make major purchases, invest, and borrow money — all of which help boost economic activity. The Conference Board — a nonprofit research organization — measures consumer confidence through a monthly survey that asks a sample of consumers questions about current economic conditions, expected future conditions, and their personal finances. This data is then aggregated into a single number, called the Consumer Confidence Index (CCI). Additionally, the University of Michigan conducts its Surveys of Consumers monthly to formulate its own Index of Consumer Sentiment (ICS). These figures are used by economists, policymakers, businesses, and other stakeholders to gauge where the economy is headed and guide their decisions. Consumer confidence has been trending downward over the last year. In fact, according to the latest report from The Conference Board, consumer confidence declined for the fifth consecutive month in April, falling to levels not seen since the onset of the COVID pandemic. Stephanie Guichard, senior economist, global indicators at The Conference Board, noted in a recent statement that this decline is largely due to a drop in consumer expectations related to business conditions, employment prospects, and future income. In fact, more than 32% of respondents expect fewer job opportunities in the next six months — nearly the same percentage as in April 2009 during the Great Recession. Consumer confidence may not have a direct impact on your wallet, but it can influence you and your finances in subtle, but important, ways. When consumer confidence is higher and spending increases, it can lead to higher inflation if the supply of goods can't keep up with demand. In turn, your money's purchasing power is reduced. In other words, it costs you more money to afford the same everyday essentials. Read more: How to protect your savings against inflation Meanwhile, shaky consumer confidence can lead to a more volatile stock market. Investors often look to this index to get a sense of how certain stocks will perform and make decisions accordingly, which could have an impact on your portfolio — at least in the short-term. Consumer confidence also influences economic policy. For instance, shifts in consumer confidence can help the Federal Reserve assess whether the economy is overheating or slowing down too much. It may decide to adjust the federal funds rate to encourage more spending or saving, depending on what's needed to keep the economy running smoothly. When the Fed adjusts this rate, interest rates on savings and credit products follow suit, impacting how much it costs to borrow money and how much you can earn on your bank account balances. Ultimately, it's a good idea to keep your eye on consumer confidence. It can help you anticipate shifts in the economy that might affect your job, investments, or spending plans. But remember, it's one of many indicators that experts rely on, and it doesn't always tell the whole story. Related: What is a yield curve, and what can it tell us about the future of interest rates?
Forbes
28-04-2025
- Business
- Forbes
Sentiment Surveys, A Slippery Terrain To Navigate
The Survey Research Center (SRC) at the University of Michigan is a well-known survey research entity. In the 1960s, it boasted one of the best survey sampling experts (Leslie Kish) and a permanent interviewing staff, conducting surveys on numerous topics. The Survey of Consumer Finances, focusing on consumer behavior, was an exceptionally long survey based on about 1,500 in-person interviews randomly selected across the U.S. The survey took a long time to complete (an hour was not unusual) and interviewers could make as many as 10 attempts to get an interview. Response rates ran near 100% (the Federal Reserve now does this survey via telephone. See 'Bias and Callbacks in Sample Surveys,' Journal of Marketing Research, William Dunkelberg). Respondents were more patient and available in those days. The SRC still conducts monthly surveys about consumer sentiment (developed by Dr. George Katona), that are closely followed by financial analysts and the press. The March survey revealed a large change in sentiment over the past six months, with the Index of Consumer Sentiment declining from 70.5 in October to 57.0 in March. With information about each respondent, researchers can examine in more detail the sources and causes of these changes. During the last six months, we had an election, and the impact of the election varied by respondent characteristics, including political affiliation. Indeed, the Index fell from 91.4 to 41.3 for Democrats (a drop of 50.1 points) but rose from 53.6 to 87.4 for Republicans (a gain of 30.8 points). Votes cast by Republicans far outnumbered those cast by Democrats in the election. If the University of Michigan's sample had equal numbers of both (the Index for Independents barely changed), overall sentiment would have risen, not plunged. NFIB's Small Business Optimism Index is constructed from 10 variables that are forward-looking or supportive of hiring and spending. The Index provides a monthly summary data point for the state of the small business economy. From October 2024 to March 2025, the Index rose from 93.7 to 97.4; the 51-year average is 98. The survey is based on a random sample of member firms and questionnaires are mailed twice to increase the response rate. Until the election, the Index was below 98, remaining below 94 for over a year. Although most of the Index components rose, the dominant components were Expected Business Conditions and Expected Real Sales. Clearly the election outcome changed owners' expectations about the future economy. Historically, the correlation between the Index and business spending is positive, an increased willingness to spend and hire. However, this time there was a large increase in uncertainty. NFIB's Uncertainty Index (based on the frequency of 'uncertain' and 'don't know' responses to six questions) rose to a record-level of 110 in October 2024. It then fell to 86 after the election, and later rose to 104 in February (the second highest reading) as the Administration announced an avalanche of policy changes. As Congress and the President reach agreements, uncertainty will recede.
Business Journals
21-04-2025
- Business
- Business Journals
Morning Consult economist: Uncertainty erodes consumer confidence
A new index from Morning Consult and American City Business Journals tracks consumer sentiment in major metro areas. Here's how consumers are feeling, which metros led the way and why an 'odd disconnect' is developing. The turmoil over tariffs and trade policy is cutting into consumer confidence. That's according to new data from global decision intelligence company Morning Consult, which is partnering with American City Business Journals on the new Metropolitan Consumer Sentiment Index. The Metropolitan Consumer Sentiment Index will provide metro-level insights in 46 major metros across the U.S., giving visibility into how consumer confidence is shifting at the local level. GET TO KNOW YOUR CITY Find Local Events Near You Connect with a community of local professionals. Explore All Events Morning Consult's survey engine conducts more than 5,000 daily interviews nationwide and uses a stratified sampling model to ensure representation across key demographics within each metropolitan statistical area. That data will power the new MCSI. Nationally, 27 of the 46 metro areas tracked by the MCSI recorded an index score above 100 in the first quarter, which represents positive sentiments about the economy. Scores declined between the fourth quarter of 2024 and the first quarter of 2025 in 22 of the 46 markets. The MCSI was tabulated before the Trump administration's tariff announcement on April 2 — and the accompanying turmoil in the stock market — but economists from Morning Consult said the impact of the tariffs was already becoming noticeable at both the national and local level due to prior announcements and expectations of higher tariffs. The early April announcement only accelerated those trends. Deni Koenhemsi, head of economic analysis at Morning Consult, said the recent volatility and stock market turbulence sparked a downward trend in consumer sentiment — similar to what was seen in the early days of the pandemic. "Even if we look at it by small-business owners, you see the downward trajectory (for sentiment), which was definitely buoyant at the beginning of the year. Things changed quite fast," Koenhemsi said during our recent Member-Only Webinar on how to navigate the new tariffs. At the end of the first quarter, the overall national Index of Consumer Sentiment was 96. By April 8, that had fallen to 94.8. That's down from 101.2 at the start of the year. Sentiments are strongest in the Sun Belt Nationally, Sun Belt markets dominated the top of the new index. Metros with the highest MCSI scores in the first quarter were: Birmingham, Alabama (108.8); Houston (108.8); Atlanta (108.7); Miami (108.6); and Nashville, Tennessee (108.3). At the other end of the spectrum, Portland, Oregon (83.9); Providence, Rhode Island (92.3); Albuquerque, New Mexico (92.4); Boston (92.8); and Wichita, Kansas, (93.9) had the lowest scores for the quarter. Birmingham and Dayton, Ohio, posted the strongest increases in the first quarter, with both metro's MCSI scores jumping 6.8 points compared to the fourth quarter. Albany, New York, had the largest decrease in sentiment. Its score fell 8.4 points. Inside the Metropolitan Consumer Sentiment Index At the national level, the Morning Consult data showed a paradox in consumer sentiment. More people are beginning to feel their personal finances are better off now than they were 12 months ago, according to survey data from Morning Consult. About 22% of respondents said in April they felt their financial position had improved over that period, up from 17.7% in October. That would typically indicate consumers feel their finances are on an upward trajectory, but there's also a growing sentiment among the surveyed group that they will be worse off, not better, in 12 months. Just under 22% of respondents expressed that sentiment in April, up from 15.8% at the start of the fourth quarter. 'That's a really odd disconnect — generally, they're positively correlated with each other,' said John Leer, chief economist with Morning Consult. 'But it captures what's going on right now.' Inflation was low in the first quarter, and the job market in 2025 has so far proved resilient. But at the same time, consumers are awash with uncertainty around economic policy — tariffs in particular — coming out of the White House. 'There's no world out there where that disconnect can continue indefinitely,' Leer said. 'We'll have to monitor it to see which vision of this story wins out.' Over a longer-term horizon, the expectation that the economy is getting worse becomes more stark. About 40% of respondents at the start of the fourth quarter said they expected periods of widespread unemployment or depression in the next five years, according to Morning Consult. By April, that share had risen to 45.9%. The Trump administration's tariff policy has shifted several times since the start of the year, with several delays and changes to tariff rates in the past three months. As of April 14, the U.S. had imposed a 10% tariff on all imports, with a few exceptions, including a tariff on Chinese imports that skyrocketed in just a handful of days to 145%. Uncertainty erases consumer sentiment gains since election Whatever happens with tariffs, the whiplash consumers have experienced in the first few months of President Trump's administration will have a lasting impact. Consumers have learned how quickly things can change, they've seen their retirement portfolios shed value in a single day as the stock market plunged only to begin climbing the next, and uncertainty is weighing heavily on them, Leer said. Broadly, Morning Consult's national consumer sentiment index has fallen below where it sat in November, when Trump was elected, erasing an increase that followed the election. There's a stark divide between how Republicans and Democrats have viewed the economy, but Republican sentiment generally improved more quickly following the election than Democrat sentiment fell, Leer said. 'There was a sense out there that the country was giving the president a chance to see what his economic policies would mean,' Leer said. 'We're now just below the level where Donald Trump inherited the economy in terms of consumer sentiment. So that grace period is over.' The five-day moving average of Morning Consult's Index of Consumer Sentiment reached 98.8 the week of Nov. 4. It peaked at 103.3 on Jan. 20 — the date of Trump's inauguration and the highest it's been since the start of the Covid-19 pandemic — but has since plunged to 94.2. There's a similar dynamic at play among financial executives. Those included in the latest AICPA & CIMA Economic Outlook Survey reported less confidence in the economy than they did in the fourth quarter. In that survey, 47% said they were confident in the U.S. economy, down from 67% in the prior quarter. That survey ended in late February, much earlier than the announcement of several new tariffs. Broad economic uncertainty also has had an effect beyond sentiment. John Scannapieco, partner at Womble Bond Dickinson, said he has had international clients who were planning direct investment in the U.S. step back from those plans. He shared those insights during an April 10 panel by The Business Journals on tactics for business owners to navigate tariffs. 'They've paused over not just the tariffs, but also general policy instability. They're really concerned about that,' Scannapieco said. 'It's been one project out of the Middle East and two out of Asia that have put the brakes on.' Older Americans are less optimistic In the Morning Consult survey, respondents ages 65 and older were the most likely to have a negative outlook on their personal finances, with 33.8% believing they would be worse off in the next 12 months, as of April. That age group is more exposed to near-term threats to their retirement, Leer said. 'You see the older folks being hyper-concerned about inflation. They're on fixed incomes, so inflation directly erodes their purchasing power,' Leer said. Morning Consult found in a different report about 70% of survey respondents expected companies to pass at least some of the cost of tariffs on to consumers. Get more stories like this one in your inbox every day by subscribing to The National Observer newsletter. Sign up for Bizwomen's free daily newsletter for news about businesswomen across the country and business intelligence to help you grow your business, advance your career and simplify your professional life.
Yahoo
07-04-2025
- Business
- Yahoo
Schwab Trading Activity Index™: STAX Score Drops Amid March Uncertainty
Schwab clients were sellers of equities in March; Net selling was highest in the Information Technology, Energy, and Health Care sectors WESTLAKE, Texas, April 07, 2025--(BUSINESS WIRE)--The Schwab Trading Activity Index™ (STAX) decreased to 48.36 in March, down from its score of 51.94 in February. The only index of its kind, the STAX is a proprietary, behavior-based index that analyzes retail investor stock positions and trading activity from Schwab's millions of client accounts to illuminate what investors were actually doing and how they were positioned in the markets each month. The reading for the four-week period ending March 28, 2025, ranks "moderate low" compared to historic averages. "Schwab clients decreased their market exposure by offloading equities in March, but those outflows were buoyed somewhat by buying in fixed income and ETFs, which retail traders turned to instead of picking up individual names on dips," said Alex Coffey, Senior Trading and Derivatives Strategist at Charles Schwab. "From an economic data perspective, the first two weeks of the month were disappointing, and although we saw a leveling off by the third week, that momentum stalled as March came to an end." Schwab clients stepped back from equities during the March STAX period as stocks slumped to six-month lows amid U.S. policy uncertainty and weaker economic data. The S&P 500 hit its highest level of the period on the very first trading day, March 3, and a steep descent followed through mid-month. Though March started with a solid expansion for the February ISM Manufacturing PMI®, economic data became increasingly disappointing as the days went by and the sharp month-over-month drop of the University of Michigan preliminary Index of Consumer Sentiment to 57.9 from February's 64.7 dialed up investor worries about possible "stagflation," characterized by weak growth and rising prices. The February nonfarm payrolls report reinforced economic worries, with jobs growth up slightly from January but closely followed by the measure of un- and underemployed workers rising to 8% from 7.5% in January. In another gloomy development, Delta Air Lines (DAL) cut its first quarter profit estimates due to what it said was U.S. economic uncertainty. Congress narrowly avoided a government shutdown, but turbulence in the nation's capital didn't help sentiment on Wall Street. The Federal Reserve meeting that ended on March 19 featured another rate pause and upbeat words from Fed Chairman Jerome Powell that appeared to reassure the market, but the Fed's updated economic projections showed expectations of slower growth and higher inflation by the end of the year, reinforcing economic concerns. Those concerns also found traction as the Atlanta Fed's GDPNow model for first quarter gross domestic product (GDP) growth fell into negative territory. Though February's Consumer Price Index (CPI) initially eased price fears with lower-than-expected growth, the core inflation reading in the March 28 Personal Consumption Expenditures (PCE) Price Index came in above expectations and the month's STAX reporting period ended on a sour note as the S&P 500 fell nearly 2%. As concerns over the economy mounted, so did stock market volatility. The Cboe Volatility Index® (VIX) reached nearly 30 by mid-March after entering the month below 20, near the historic average. Though the VIX dipped substantially late in March, it finished the March STAX period above 21 and may have helped draw investors away from growth stocks. Popular names bought by Schwab clients during the period included: NVIDIA Corp. (NVDA) Tesla Inc. (TSLA) Inc. (AMZN) Palantir Technologies Inc. (PLTR) Alphabet Inc. (GOOGL) Names net sold by Schwab clients during the period included: AT&T (T) MicroStrategy Inc. (MSTR) Alibaba Group Holding Ltd. (BABA) Exxon Mobil Corp. (XOM) Chevron Corp. (CVX) About the STAX The STAX value is calculated based on a complex proprietary formula. Each month, Schwab pulls a sample from its client base of millions of funded accounts, which includes accounts that completed a trade in the past month. The holdings and positions of this statistically significant sample are evaluated to calculate individual scores, and the median of those scores represents the monthly STAX. For more information on the Schwab Trading Activity Index, please visit Additionally, Schwab clients can chart the STAX using the symbol $STAX in either the thinkorswim® or thinkorswim Mobile platforms. Investing involves risk, including loss of principal. Past performance is no guarantee of future results. Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type. Historical data should not be used alone when making investment decisions. Please consult other sources of information and consider your individual financial position and goals before making an independent investment decision. The STAX is not a tradable index. The STAX should not be used as an indicator or predictor of future client trading volume or financial performance for Schwab. About Charles Schwab At Charles Schwab, we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients' goals with passion and integrity. More information is available at Follow us on X, Facebook, YouTube, and LinkedIn. 0425-EG0X View source version on Contacts At the Company Margaret FarrellDirector, Corporate Communications(203) Sign in to access your portfolio
Forbes
31-03-2025
- Business
- Forbes
U.S. Tariffs And Tariff Policy Uncertainty Add Stagflation Risks
Stagflation risks are rising. U.S. consumer confidence has recently fallen while consumer inflation rates remain elevated. The prospects for Q1 2025 U.S. gross domestic product are currently negative, while year-on-year inflation rates are above the Fed's 2% target. Tariffs present inflationary risks, but tariff uncertainty risks appear recessionary—and could be deflationary. Forthcoming U.S. tariff announcements on April 2 present additional significant downside risks for equity, bond, and commodity markets. Traders work during the opening bell at the New York Stock Exchange (NYSE). Photo by JOHANNES ... More EISELE/AFP via Getty Images. In the 1970s, stagflation was a mix of deep recession and double-digit inflation. However, a more muted scenario of falling growth and elevated inflation is becoming an increasingly plausible scenario in the current economic environment. U.S. real gross domestic product growth decelerated in Q4 2024 to 2.4%, following a strong 3.1% in Q3 2024. Last week, March Consumer Confidence and Consumer Sentiment fell sharply, while monthly February Personal Consumption Expenditures inflationary pressures accelerated. Because U.S. consumer confidence weakened significantly in February and March, it has weighed on the U.S. growth outlook. The Atlanta Fed's GDPNow is a real-time measure of forecasted growth based on the latest economic releases, and the GDPNow for Q1 2025 reflects growth is likely to be –2.8% as of March 28. Furthermore, trade and tariff policies present further uncertainty and downside risks. March data will make or break the Q1 outlook. Plus, some Q1 inventory restocking could ameliorate some downside risks to this figure. However, with such a negative Q1 2025 GDPNow, the risks of recession have clearly risen. On the upside for the economy, the U.S. labor market is solid, with an unemployment rate of only 4,1%, fewer than 1.9 million continuing jobless claims, and over 7.7 million open jobs. U.S. consumer debt delinquencies were around 3.6% in Q4. Despite a strong labor market, weakening consumer confidence is weighing on growth. Consumer confidence and sentiment are critical for the U.S. economic outlook because consumption is the lion's share of U.S. economic growth. In fact, almost 70% of GDP growth in Q4 2024 was personal consumption. In the Conference Board's Consumer Confidence Index, the present situation and expectations series fell in March. The headline index fell to 92.9 from 100.1 in February. Meanwhile, the present situation series fell to 134.5 from 138.1 in February. However, the expectation series fell sharply to 65.2 from 74.8 in February. Most importantly, the expectations series is now at the lowest level in 12 years and below 80, which is often seen as a signal of a potential future recession. The deterioration of this series has been rapid since the expectations series was 93.7 in November. Meanwhile, the final March University of Michigan Index of Consumer Sentiment fell to 57 from 64.7 in February. The outlook series had a bigger impact on the decline in the headline consumer sentiment series since the outlook fell sharply to 52.6 from 64 in February, while the present series fell more modestly to 63.8 from 65.7. U.S. Consumer Sentiment and U.S. Consumer Confidence fell sharply in March 2025. Year-on-year consumer inflation rates are elevated. While the Consumer Price Index saw decelerations in year-on-year annual rates for total and core CPI, the year-on-year core PCE inflation rate accelerated for February. February year-on-year consumer inflation rates were 2.8% for the total CPI, 3.1% for core CPI, 2.5% for total PCE, and 2.8% for core PCE. Total year-on-year CPI and PCE consumer inflation rates are likely to fall close to the Fed's 2% target in 2025. While FOMC projections imply only two rate cuts in 2025, Prestige Economics expects three 0.25% rate cuts. Plus, even more cuts are likely if inflation or growth slows. Prestige Economics expects the next Fed rate cut on June 18, and the odds of a June 18 Fed rate cut of at least 0.25% were 78.4% as of March 31 at 9:11 a.m. ET. Falling consumer confidence, the prospects of negative growth, and elevated inflation reveal significant stagflation risks, which would be the worst of both worlds for the U.S. economy and the future of Fed policy. The Fed is poised to cut interest rates, especially if inflation eases and job gains slow. And if tariff risks remain elevated, the Fed may need to cut rates significantly more than is currently priced into financial markets. However, if growth slows but inflation remains elevated, the Fed may struggle to implement more accommodative monetary policies to support confidence and buttress growth. There were a lot of positive data releases last week. However, they were not strong enough to materially reduce the potential for a contraction in Q1 2025 GDP growth. This week, non-farm payrolls are likely to be positive, with the potential for a modest slowing from February. A modest rise in the unemployment rate also seems like if the Household Survey reflects more people reporting being unemployed, which could be a function of fewer people having difficulty finding jobs despite high payrolls and job openings. Tariff risks present the most significant downside potential for financial markets in the week ahead, which means the upcoming April 2 U.S. tariff announcements could add to stagflation risks threatening markets.
