Michigan Consumer Sentiment Preview – 12th September
We head into tomorrow’s print looking for a modest softening in sentiment following August’s downtick. The prior headline was 58.2; consensus is currently 58, and we are looking look for slightly below at 56.5 – 57.0.
Our bias reflects softer labor perceptions and a small uptick in gasoline prices keeping inflation expectations sticky, partly offset by equity strength and easier mortgage rates. Market impact should be contained unless we see an outsized move in 1-yr inflation expectations (above 5%) or a headline below 55, which would carry clearer implications for front-end rates and USD risk pairing.
Here’s our read:
Tomorrow’s U-Michigan Consumer Sentiment (prelim Sep) is due out Fri 12 Sep, at 15:00 UK / 10:00 ET).
Headline prior was 58.2; street 58. We’re slightly below consensus, looking for 56.5–57.0, with a downside tilt.
Why a touch below:
- Last print deteriorated & inflation expectations rose: August fell to 58.2 with 1-yr inflation expectations up to 4.8% and 5 – 10yr to 3.5%, the survey explicitly flagged price worries and weaker buying conditions. That tone usually bleeds into the next prelim unless there’s a clear offset.
- Labour sentiment is wobbling: August payrolls were a downward +22k with unemployment up to 4.3%, and the BLS just disclosed big historical job revisions. Separately, the NY Fed SCE shows job-finding expectations at a series low and short-term inflation expectations ticking up. All of that tends to weigh on the Michigan expectations sub-index.
- Gasoline has edged up from mid-August: National average regular is $3.19/gal today vs $3.14 a month ago. EIA weekly shows a mild early September rise. Michigan sentiment is historically sensitive to gas prices, so even small bumps can move the headline.
- Price data backdrop: August CPI came in 2.9% y/y with core 3.1% y/y (in line with expectations), while PPI surprised -0.1% m/m. Consumers feel prices at the pump more than producer margins, so this mix doesn’t reduce the risk that U-Mich inflation expectations stay elevated.
- Offsets (not enough, in our view): Equities set fresh highs and mortgage rates dipped to ~11-month lows, which can support higher-income cohorts’ sentiment and housing-related “buying conditions.” Helpful, but typically less powerful than fuel prices + job worries for the Michigan series.
Component bias into tomorrow
- Current Conditions: Down (tight budgets from prices; softer personal finances; slightly higher gas).
- Expectations: Down/modestly down (weaker job-finding perceptions; persistent price anxiety).
- Inflation expectations: Base case sticky-elevated (1-yr around 4.6 – 4.9%; 5 – 10yr – 3.5%). Gas + tariff chatter nudge up; PPI softness is unlikely to register with households.
Markets take for FX rates
Michigan usually isn’t a primary market driver unless the surprise is big or inflation expectations jump. Here’s the grid I’m using:
- <55 headline and/or 1-yr infl-exp >5.0%: Growth scare vs. inflation mix. Front-end yields ↓ on growth, but breakevens/long end could resist if expectations pop. USD softer vs. EUR/CHF; USDJPY ↓ (JPY bid on risk-off).
- 56 – 59 (our base): Near consensus; muted market impact. Micro-moves fade; USD/rates track CPI/Fed expectations instead.
- >60 and infl-exp tame: Risk-on impulse. Yields firm a touch, USD firmer vs. JPY/CHF; EURUSD/GBPUSD slip modestly.
What could swing it
- Gas price prints into the survey window (marginal uptick). AAA Fuel Prices
- News about jobs & Fed cuts shaping consumer narratives (job revisions; easing mortgage rates). Reuters+1
- Equity wealth effect at records (partial offset). Reuters
Our call
- Headline: 56.5–57.0 (below the 58 consensus; broadly in line with your 57).
- Bias: Downside if the expectations sub-index reflects the NY Fed’s “harder to find jobs” signal and if 1-yr inflation expectations stay sticky.
Conclusion
We expect the prelim Michigan Sentiment to edge down to 56.5–57.0 (below 58 consensus)—a modest softening led by weaker job perceptions and slightly higher gasoline prices, partly offset by equity strength and easier mortgage rates. Market impact should be muted unless we get a headline ≤55 or a jump in 1-yr inflation expectations to ≥5.0%; those tails would matter for front-end rates and USD (particularly USDJPY on risk sentiment).
Watch-fors at 15:00 UK:
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Expectations sub-index vs Current Conditions (labour narrative vs. wallet check).
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Inflation expectations (1-yr and 5–10yr) for any de-anchoring risk.
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Buying conditions for durables/vehicles (sensitive to gas and rates).
Base case: small downside miss, fading any knee-jerk unless the inflation-expectations print surprises.
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