Via Curtis Dubay, Chief Economist, U.S. Chamber of Commerce
Consumer sentiment about the economy, as measured by the University of Michigan, fell in early March. It has moved little over the first three months of 2024 after rising at the end of 2023.
Why it matters: Economists have long used consumer sentiment as a leading indicator for the economy, because when consumers feel better, they spend more, and vice versa.
- But over the last few years, there has been a split between headline economic data such as GDP growth, jobs, and income gains and how consumers feel about the economy. Positive data has not moved consumer sentiment.
Bottom line: Consumers are in a holding pattern in how they view the economy. Since consumer sentiment has become a less reliable indicator for tracking economic developments than it has been in the past, I will be focusing my updates on other data.