Consumer Confidence and Sentiment
Surveys asking households how they feel about conditions and prospects. What people say and what they do have diverged substantially for long periods.
MadStockAlerts Research · Updated August 28, 2026
What to take away
- Two widely followed surveys, with different question weightings.
- One is weighted toward labour market conditions, the other toward finances and prices.
- The expectations component is watched more than the current conditions one.
- Inflation expectations from these surveys feed into policy discussion.
- Sentiment and actual spending have diverged for extended periods.
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What People Say Versus What They Do
Sentiment surveys measure how people feel, and the gap between stated pessimism and actual spending is often very wide.
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The two surveys
| The labour-weighted survey | The finances-weighted survey | |
|---|---|---|
| Emphasis | Job availability and business conditions | Personal finances and buying conditions |
| Tracks most closely | The labour market | Prices, particularly petrol |
| Components | Present situation and expectations | Current conditions and expectations |
| Additional output | Labour differential: jobs plentiful less jobs hard to get | Inflation expectations, one year and longer term |
The differing emphases mean the two can move apart, and the divergence itself is informative: a gap usually indicates that the labour market and household purchasing power are telling different stories.
The say-do gap
Sentiment readings and actual consumption have diverged for extended periods, most visibly when households reported very poor conditions while continuing to spend. Reported feeling and revealed behaviour are different measurements.
Scroll the chart sideways to see all of it.
- Consumer sentiment
- Real consumer spending
Political affiliation has also been shown to affect reported sentiment substantially, which is one documented reason the surveys have become less useful as a predictor of spending than they once were.
Why the expectations component matters
The expectations subcomponent has historically had a better relationship with subsequent activity than the current conditions one, which is unsurprising: asking about the future produces a forward-looking series and asking about now produces a coincident one.
The inflation expectations output
One of these surveys publishes household inflation expectations at one year and at longer horizons. Those figures are watched by policymakers because expectations becoming unanchored is the specific mechanism by which a supply shock becomes persistent inflation.
That connects this survey to the second-round effects described in the oil article. Household expectations are one of the three things watched to determine whether a shock has propagated, alongside core inflation and wage growth.
What the surveys are still good for
Given the divergence between reported sentiment and actual spending, it is worth being specific about where these series retain value.
- The inflation expectations component, which feeds directly into the second-round question policymakers are watching.
- The labour differential, which has tracked the unemployment rate reasonably well and arrives earlier.
- Large and abrupt changes, which are unusual and have coincided with genuine shifts.
- The gap between current conditions and expectations, which widens ahead of turning points.
The second item is the strongest. A survey question about job availability produces a series that leads the official unemployment rate and is available weeks earlier, which is a genuine informational advantage rather than a sentiment reading.
What the headline index is not good for is forecasting spending, which is what it is most often quoted as doing. That relationship has weakened enough that it should be treated as a description of mood rather than as a predictor of behaviour.