Learn · Economy

Consumer sentiment

Surveys of how households feel about their finances and the economy. Low readings often precede weaker spending, though sentiment and spending can diverge.

In the US, the University of Michigan survey; in Australia, the Westpac-Melbourne Institute index. Questions cover finances now and a year ahead, and whether it is a good time to buy major items.

Michigan also asks households what inflation they expect, a measure central banks watch.

Why it matters

Spending is most of the economy, and confidence shapes it at the margin. Sentiment is also driven by petrol prices and politics, so it can fall without spending following.

See the data: US consumer sentiment.

General information, not advice.

Right now

US consumer sentiment	51.7−6.3%

Related terms

Retail sales and household spendingHow much households spend in shops and, more broadly, on goods and services. Consumer spending is the largest part of GDP in both Australia and the US.
Inflation expectationsWhat households, businesses and economists expect inflation to be. Central banks watch them closely because expectations can become self-fulfilling.