Measures of consumer sentiment

The takeaway

Measures of household financial well-being don’t always align with consumer sentiment. You can feel relatively secure about your finances while still being pessimistic about the overall economy.

Are you doing OK?

In an earlier post, we described a measure of household financial well-being from the Federal Reserve Board’s Survey of Household Economics and Decisionmaking (SHED). In this post, we add a way to measure households’ view of the economy: the University of Michigan’s Index of Consumer Sentiment.

Our FRED graph above tracks, side by side, the share of adults who say they’re “doing okay financially” from the SHED and the index values of consumer sentiment from the University of Michigan.

Before the COVID-19 pandemic, these two measures moved in the same direction. The share of adults doing at least okay financially increased, while consumer sentiment was also relatively high. The story looks different after the pandemic. Consumer sentiment fell sharply and remains low: Its value averaged 95.9 in 2019 and was 71.7 in January 2025. The share of adults saying they’re doing at least okay, though, has remained relatively high: It was 75% in 2019 and it was 73% in 2025.

There seems to be a disconnect. Most respondents continue to report financial stability while overall consumer sentiment is much more pessimistic than it was before the pandemic.

Are you worse off today?

The SHED also asks a more specific question: Are you worse off financially than you were 12 months ago?

Our second FRED graph, above, compares this measure with the same Michigan Consumer Sentiment Index. (We plot 100 minus the percentage so that an increase in one series is consistent with a increase in the other.)

Here, the two measures tell a more similar story. Before the pandemic, the share of adults reporting they were not worse off than they were a year earlier was increasing. After the pandemic, that share dropped sharply and has remained low. Measured this way, households’ assessments of their own finances are more consistent with the decline in overall consumer sentiment.

The difference between the two SHED measures may partly reflect what each question is asking. Saying you’re doing okay financially describes your current financial position. Saying you’re worse off than a year ago describes how that position has changed. It’s not hard to imagine a household reporting both these things at the same time.

It’s also possible that financial experiences have become more uneven across households, with some households doing relatively well while others have seen their financial situations deteriorate, consistent with the divergence of the two SHED measures.

And there’s another possibility. People may feel relatively secure about their own finances while still being pessimistic about the economy overall. The SHED explicitly asks about respondents’ own financial situations. The Michigan index is broader, incorporating views about personal finances, business conditions, and buying conditions. That leaves room for a disconnect between how people assess their own circumstances and how they assess economic conditions more generally.

The graphs don’t tell us exactly what’s driving the difference, but they show people’s assessments of their own finances can look quite different from their assessments of the broader economy.

How the graphs were created:
For the first graph, search FRED for and select “Survey of Household Economics and Decisionmaking: At Least Doing Okay Financially: All Adults” (series ID ATLEASTDOINGOKAYFINANCIAL). Click “Edit Graph,” click “Add Line,” and search for and select “University of Michigan: Consumer Sentiment” (series ID UMCSENT). Click “Add Data Series.” Next, select the University of Michigan series under “Edit Lines” and open the “Format” tab. Set its y-axis position to “Right.” Set this graph to begin on January 1, 2013. and end on January 1, 2025, corresponding to the first and last years, respectively, available for this SHED measure.
For the second graph, repeat the same steps, replacing the first SHED series with “Survey of Household Economics and Decisionmaking: Worse Off Financially Than 12 Months Ago: All Adults” (series ID WORSEOFFFINANCIALLYALLADU). For this series, enter 100-a in the formula field. Again, add UMCSENT as the second line and place it on the right y-axis. Set this graph to begin on January 1, 2014, and end on January 1, 2025, corresponding to the first and last years, respectively, available for this SHED measure.

Suggested by Victoria Gregory.