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Consumers Expect Better Days Ahead

Consumers Expect Better Days Ahead

| December 18, 2023

Many consider the University of Michigan the gold standard for reporting on consumer sentiment and trends. Among its 50 monthly reports, the most well-known is the "UMich Consumer Sentiment" survey, which measures consumer confidence.

I also follow the University of Michigan's “Expected Change in Financial Situation in a Year" report. As we see below, the index has been trending higher for over a year as inflation has moved lower and financial markets gained.

Investors believe their financial situation will improve due to a wide range of factors, including interest rates and home prices, to name a few. When investors are positive about the future, they tend to be more comfortable making longer-term commitments.

So when you see negative updates on credit card debt, the jobs market, or other reports, remember what this chart tells us: Despite all the concerns, people believe their financial situation will improve.