Current University of Michigan Consumer Sentiment Index and Fed Policy/Actions

[Montecfo]

This is very telling conclusion:

"Compared with an economy with low consumption concentration, the current economy with high consumption concentration is more vulnerable to downside risks in return on assets and less vulnerable to a temporary slowdown in the labor market. Quantitatively, the effects are small. Consumption concentration may be up but has resulted in little heightened economic fragility."

This is what I would expect. Hopefully we can stop needlessly attributing so much risk to consumption concentration. As the report makes clear this is nothing new and matters little in terms of "economic fragility".

 

[Koolau]

This is very telling conclusion:

"Compared with an economy with low consumption concentration, the current economy with high consumption concentration is more vulnerable to downside risks in return on assets and less vulnerable to a temporary slowdown in the labor market. Quantitatively, the effects are small. Consumption concentration may be up but has resulted in little heightened economic fragility."

Thanks! I didn't want to read that report (skimmed it).

 

[thenameiwish]

That is fair, but it is also hard to ignore that we live in an era where many of the wealthiest Americans, especially in the upper income brackets, lean Democratic, and the richest districts in the country are usually blue.

This piqued my curiosity. Perhaps there's a study showing correlation between corruption and wealth. I wonder... Perhaps someone could break it down by zip code and occupations? I'm told D.C. has a high concentration of wealth. Hmmmm

 

[thenameiwish]

This piqued my curiosity. Perhaps there's a study showing correlation between corruption and wealth. I wonder... Perhaps someone could break it down by zip code and occupations? I'm told D.C. has a high concentration of wealth. Hmmmm

Yep, checks out. There's also another strong correlation.

 

[MichaelB]

There’s also a strong positive correlation between politics and Porky.

 

[target2019]

The smell of bacon sizzling in the pan is intoxicating.

Porky, you can't avoid the sizzle forever!

 

[Qs Laptop]

Does anybody think the FED gives a lick about the University of Michigan sentiment index? You think they really base their policy decisions on what that thing says?

 

[Chuckanut]

My liquid assets are up 4% YTD as of last week. Slow and steady wins the race.

I managed to make a mental note of the disaster predictions from certain Big Name political commentators when this war started. As usual they are remarkably wrong.
They beat the law of averages by doing worse than simply flipping a coin.

Will they make up for their failures as the war and peace talks progress? Maybe.

 

[audreyh1]

I managed to make a mental note of the disaster predictions from certain Big Name political commentators when this war started. As usual they are remarkably wrong.
They beat the law of averages by doing worse than simply flipping a coin.

Will they make up for their failures as the war and peace talks progress? Maybe.

You never know, the situation may flip flop many times.

 

[Montecfo]

Does anybody think the FED gives a lick about the University of Michigan sentiment index? You think they really base their policy decisions on what that thing says

Lots of better metrics out there. Better meaning valid.

 

[Dalton]

Lots of better metrics out there. Better meaning valid.

I have no doubt that any politician/bureaucrat would fervently cite any study that offered support for whatever policy they may be proposing at the time.

 

[Onda]

This is what I would expect. Hopefully we can stop needlessly attributing so much risk to consumption concentration. As the report makes clear this is nothing new and matters little in terms of "economic fragility".

Headline economy can appear/be healthy while many/majority households feel weaker. Which also supports your statement.

This is what I see in that report.

 

[MichaelB]

There is another periodic survey of consumer sentiment conducted by the Conference Board (here). It shows a slightly more positive picture.

It is important to differentiate observed vs revealed preferences. These surveys are observed, or what people say. Revealed is how they act. While the Michigan consumer index reflects consumers stating they are increasingly pessimistic, consumer credit and real after inflation spending is rising. Their behavior contradicts their expressed opinions and shows more optimism.

There’s a very good Fed paper on this (here). Fed policy makers consider all the data points.

This disconnect between what consumers have been saying and doing suggests that consumer sentiment surveys on their own have become weaker indicators of future consumer behavior and of the health of US consumers. While it is important to recognize how consumers feel, we should exercise caution when using consumer sentiment surveys to infer future consumer behavior given this recent disconnect between what consumers say and do.

 

[Montecfo]

Headline economy can appear/be healthy while many/majority households feel weaker. Which also supports your statement.

This is what I see in that report.

Well I guess you see what you want to see. The report's conclusion was that income concentration is nothing new and made little difference. It was more of a macro type analysis.

Your statement is true I think, but I am not sure why you wish to keep making it.

Inside the greatest economy there are regular folks struggling. Inside the worst there are regular folks thriving. Interesting but not a news flash.