Monthly U-M consumer poll shows level of confidence in economy for policymakers

Its formal name is the 'Consumer Sentiment Index' and it's a survey dates back to 1946. It is designed to get a pulse on how people across the country feel about the economy.

According to the director of the survey; consumers tend to have a good idea of what is going on in the economy - and more importantly, where we are going.

Every month without fail, Joanne Hsu and her team at the University of Michigan are on a mission.

"There really is no substitute for just asking consumers and that’s what we do," said Hsu, director of the Survey of Consumers at U-M.

They find a diverse group of people, about 600 hundred of them, and get their answers to roughly 50 questions on the economy.

"We are really taking the pulse of how consumers feel about the economy," Hsu said.

She is continuing the work which started in 1946.  Back then it was done with face-to-face interviews. In the 1970s they moved to monthly surveys over the phone, now technology has changed that.

"Interviews are done over the web since that appears to be the way to reach people these days," she said.

And it's still done each and every month. But why do it and why ask the questions of average consumers?

"Consumer spending is about 2/3 of all output in this country," she said. "So the economy is going to go where the consumer is going."

And according to those asking the questions, the answers do matter.

"These are numbers that are watched very closely," Hsu said. "Policymakers watch them closely, folks in the private sector are using our data to generate models to make their production decisions for the future, or to make their economic forecasts for the future.

"And academics use it too, to see how people interact with the economy."

It might matter now, more than ever.

"This is critical for policymakers as they are trying to keep inflation under control," Hsu said.

Typically there are two areas of focus -  the current consumer sentiment, and where people think inflation is heading. This survey has a proven track record.

"Where people think inflation is going very closely tracks where inflation actually ends up going," Hsu said.

Timing is key, as we inch closer to an election. The questions will change and the answers tend to reflect a growing anxiety.

"Almost 20% of our consumers are putting a caveat on their responses," Hsu said. "Saying it depends on who is going to win the election."

As for who is asked to take part in this survey:

"People are randomly selected for this," said Hsu. "And we need a broad representation from across the country to get an accurate measurement. And policymakers are following closely, so this is a way for your voice to be heard."

The findings are actually published twice a month - once mid-month and a final report at the end of each month.

All the data is then available to the public on the University of Michigan's Survey of Consumer's webpage.