What have you always wondered about the economy? Tell Us

Consumer sentiment and retail sales

Dan Weissmann Dec 12, 2014
HTML EMBED:
COPY

Consumer sentiment and retail sales

Dan Weissmann Dec 12, 2014
HTML EMBED:
COPY

The University of Michigan issues its monthly Consumer Sentiment Index on Friday. Numbers from the survey have long been used as a leading economic indicator— data that economists mine for clues about what could happen next. This month’s number may contain clues about retail spending this holiday season. 

Researchers started looking at consumer sentiment decades ago, partly to help predict how much people would buy.

“It’s based on a theory that consumers needed both the ability to purchase goods and a willingness to purchase goods,” says Robert Leone, a marketing professor at Texas Christian University. “They needed both of those.”

Leone says sales numbers bear out the theory, and businesses depend on this data to make decisions: If the numbers say consumers will be skittish, retailers offer more discounts.

This year, the other factor — consumers’ ability to buy — looks good, says Chris Christopher, director of consumer economics at IHS Global Insight. “Even though their wage gains haven’t been that great, their expenses — the overall price level for things — is much lower,” he says. Lower gasoline prices put even more extra money in consumer wallets. “That’s helping them spend a little extra.” 

News and information you need, from a source you trust.

In a world where it’s easier to find disinformation than real information, trustworthy journalism is critical to our democracy and our everyday lives. And you rely on Marketplace to be that objective, credible source, each and every day.

This vital work isn’t possible without you. Marketplace is sustained by our community of Investors—listeners, readers, and donors like you who believe that a free press is essential – and worth supporting.

Stand up for independent news—become a Marketplace Investor today with a donation in any amount.