The University of Michigan Consumer Sentiment final number for April came in at 84.6, a big jump from the 80.0 March final and up from the 82.6 April preliminary. This is the highest reading since the 85.1 interim high set in July of last year, and that was the highest since July of 2007. Today’s update beat the Investing.com forecast of 83.0.
See the chart below for a long-term perspective on this widely watched indicator. I’ve highlighted recessions and included real GDP to help evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.
To put today’s report into the larger historical context since its beginning in 1978, consumer sentiment is now 1 percent below the average reading (arithmetic mean) and 1 percent above the geometric mean. The current index level is at the 43rd percentile of the 436 monthly data points in this series.
The Michigan average since its inception is 85.1. During non-recessionary years the average is 87.4. The average during the five recessions is 69.3. So the latest sentiment number puts us 15.3 points above the average recession mindset and 2.8 points below the non-recession average.
It’s important to understand that this indicator is somewhat volatile with a 3.1 point absolute average monthly change. However the latest final is a 4.6 point gain. For a visual sense of the volatility, here is a chart with the monthly data and a three-month moving average.
For the sake of comparison here is a chart of the Conference Board’s Consumer Confidence Index (monthly update here). The Conference Board Index is the more volatile of the two, but the broad pattern and general trends have been remarkably similar to the Michigan Index.
And finally, the prevailing mood of the Michigan survey is also similar to the mood of small business owners, as captured by the NFIB Business Optimism Index (monthly update here).
