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Luke Kawa

Unhappy, old, online Americans are spoiling the national economic mood


In April, the University of Michigan survey of consumers — a long-running gauge of the national economic mood that goes back to the 1940s — began to not only collect data from telephone interviews, but also those conducted online.

The overall measure of consumer sentiment has tumbled from about 80 in March to below 70, which is lower than any point during 2020.

In the release of the final April 2024 report, survey director Dr. Joanne Hsu wrote that all the results (from both phone and web interviews) were represented when examining only the data received by phone interviews. The implication was that this new method of data collection was no biggie.

But according to Ryan Cummings and Ernie Tedeschi, who analyzed the impact of including interviews conducted over the world wide web over at the Briefing Book, it turns out the online respondents are purveyors of pessimism. From the piece, emphasis theirs:

While we agree with UMich’s own analysis that the online interviews themselves display similar trends across time as phone interviews, we believe online respondents are resulting in the level of the overall sentiment and current conditions indices being meaningfully lower, making more recent UMich data points inconsistent with pre-April 2024 data points. Specifically, we use a simple statistical model to estimate that the effect of the methodological switch from phone to online is currently resulting in sentiment being 8.9 index points –or more than 11 percent–lower than it would be if interviews were still collected through the phone... The mechanism for this bias primarily runs through the “current conditions” questions, especially on durables and personal finance experiences, rather than through the “expectations” questions.

At Sherwood, we’ve often detailed how not just the University of Michigan’s gauge, but also other measures of households’ perception of the economy, have been running way, way below what you’d expect given how US growth, the job market, and inflation are actually doing.

My colleague Matt Phillips has even called BS on Americans’ self-professed displeasure with the state of the economy, pointing to the surge in gambling as proof that sentiment couldn’t be too sour.

Cummings and Tedeschi, both of whom worked at the White House Council of Economic Advisers in the current administration, don’t attempt to play Sherlock Holmes on the perception-versus-reality gap. But their analysis does offer some compelling evidence that online respondents were not as demographically diverse during the transition months for the UMich survey: they skewed toward older people, who also had a more negative view on current economic conditions, particularly related to buying conditions for durable goods and personal-financial conditions.

The two note that this dynamic is not uncommon, pointing to other studies that found online surveys have more negativity than ones done by phone.

University of Michigan Survey Demographic Changes
Source: Briefing Book (Cummings/Tedeschi)

Weird how, in this case, making a survey More Online makes it older. I guess this is like how your Facebook is now dominated by boomer parents, aunts, and uncles.

Anyways, if you’re reading this, you’re definitely online. Hope you’re not part of the problem!

In the release of the final April 2024 report, survey director Dr. Joanne Hsu wrote that all the results (from both phone and web interviews) were represented when examining only the data received by phone interviews. The implication was that this new method of data collection was no biggie.

But according to Ryan Cummings and Ernie Tedeschi, who analyzed the impact of including interviews conducted over the world wide web over at the Briefing Book, it turns out the online respondents are purveyors of pessimism. From the piece, emphasis theirs:

While we agree with UMich’s own analysis that the online interviews themselves display similar trends across time as phone interviews, we believe online respondents are resulting in the level of the overall sentiment and current conditions indices being meaningfully lower, making more recent UMich data points inconsistent with pre-April 2024 data points. Specifically, we use a simple statistical model to estimate that the effect of the methodological switch from phone to online is currently resulting in sentiment being 8.9 index points –or more than 11 percent–lower than it would be if interviews were still collected through the phone... The mechanism for this bias primarily runs through the “current conditions” questions, especially on durables and personal finance experiences, rather than through the “expectations” questions.

At Sherwood, we’ve often detailed how not just the University of Michigan’s gauge, but also other measures of households’ perception of the economy, have been running way, way below what you’d expect given how US growth, the job market, and inflation are actually doing.

My colleague Matt Phillips has even called BS on Americans’ self-professed displeasure with the state of the economy, pointing to the surge in gambling as proof that sentiment couldn’t be too sour.

Cummings and Tedeschi, both of whom worked at the White House Council of Economic Advisers in the current administration, don’t attempt to play Sherlock Holmes on the perception-versus-reality gap. But their analysis does offer some compelling evidence that online respondents were not as demographically diverse during the transition months for the UMich survey: they skewed toward older people, who also had a more negative view on current economic conditions, particularly related to buying conditions for durable goods and personal-financial conditions.

The two note that this dynamic is not uncommon, pointing to other studies that found online surveys have more negativity than ones done by phone.

University of Michigan Survey Demographic Changes
Source: Briefing Book (Cummings/Tedeschi)

Weird how, in this case, making a survey More Online makes it older. I guess this is like how your Facebook is now dominated by boomer parents, aunts, and uncles.

Anyways, if you’re reading this, you’re definitely online. Hope you’re not part of the problem!

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Cava may be an unlikely victim of a potential US government shutdown

Government shutdowns typically aren’t a big deal for the stock market as a whole.

But for Cava, which was founded in Maryland and is headquartered in Washington, DC, there’s the prospect of forgone sales in the event that government employees suddenly have no cause to frequent the fast-casual Mediterranean chain, which means emptier tills as bellies get filled elsewhere.

At the end of Q2, Cava had 398 locations. It currently boasts seven in the district proper, at least 14 a close drive away in Virginia, and 25 in Maryland.

Cava’s annual report singled out the Washington, DC/Maryland/Virginia metropolitan area as having “a high concentration of restaurants” in discussing risk factors for the company. And it may be a particularly bad time to be a slop bowl seller around the nation’s capital.

The potential shutdown would be the latest challenge for Cava as it struggles to stand out amid a myriad of lunch options for working professionals and following the recently announced departure of COO Jennifer Somers.

For what it’s worth, this is not the first time this year Cava has faced concerns about potential weakness in DC. During its Q1 earnings call, Bank of America analyst Sara Senatore questioned Cava’s leadership about a potential impact from DOGE given its “fairly big footprint” in the metro area, and at the time CFO Tricia Tolivar said the company hadn’t really seen evidence of metro-specific softness.

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Robinhood surges as prediction markets gain traction

Robinhood jumped to an all-time intraday record of more than $132 late Monday morning on growing optimism about the brokerage’s prediction markets business both on Wall Street and within the company’s own executive suite.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions. I own stock as part of my compensation.)

Earlier in the day, Robinhood Chief Executive Vlad Tenev posted this tweet spotlighting that more than 4 billion event contracts have been traded on the platform since they began to be offered in February.

Analysts have also been focusing on the uptick in activity in the events contract business as a potential boon for the shares.

Piper Sandler analyst Patrick Moley published a note on Monday highlighting how trading volumes at prediction market company Kalshi soared to new records over the weekend as traders took positions on the outcomes of college and pro football games using event contracts.

Moley estimates that users at Robinhood — which partnered with Kalshi to offer contracts on games — account for between 25% and 35% of Kalshi’s daily event contract activity.

“We continue to expect HOOD will report ~2.5B of event contracts traded in 3Q25 which, at $0.01/contract, translates to ~$25M in revenue,” Moley wrote.

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Sherwood Media, LLC produces fresh and unique perspectives on topical financial news and is a fully owned subsidiary of Robinhood Markets, Inc., and any views expressed here do not necessarily reflect the views of any other Robinhood affiliate, including Robinhood Markets, Inc., Robinhood Financial LLC, Robinhood Securities, LLC, Robinhood Crypto, LLC, or Robinhood Money, LLC.