Markets
markets
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!

More Markets

See all Markets
Chicago Bulls player Michael Jordan is surrounded by NBA Championship trophies after his team defeated the Utah Jazz 90-86 to win the 1997 NBA Finals at the United Center in Chicago, IL.

Stock climb on US-Iran peace deal; semiconductors rally

This morning, President Trump and Iranian President Masoud Pezeshkian signed a memorandum of understanding aimed at ending the war.

markets

Intel surges after Trump announces US chip deal with Apple

Intel is soaring in early trading after President Donald Trump posted on Truth Social that Apple has agreed to work with the semiconductor giant to design and manufacture its chips domestically.

President Trump positioned the agreement as the latest victory for his administration’s industrial policy after the federal government acquired a 9.9% equity stake in Intel last year.

"Stupid Presidents took our Economy for granted, and let Taiwan and others steal our Semiconductor Factories," Trump wrote in the post. "We design everything, but we need to BUILD it here, NOW! So I decided to help Intel because we need to design and build our Chips right here in America... and, finally, Apple has agreed to work with Intel to design and build its Chips in America."

Intel reportedly reached a preliminary agreement back in May to manufacture chips for the Apple, which has been facing supply constraints for its iPhone as well other products. The deal could help Apple reduce its reliance on longtime partner TSMC by bringing more of its chip manufacturing stateside.

"This partnership helps Apple with chip development and manufacturing on US soil with greater focus on reducing dependence on Asian manufacturing facilities." Wedbush's Dan Ives commented in a company report. He has a $400 price target for Apple this year.

The timing aligns with Intel's technical roadmap. Earlier this week, Intel confirmed that its advanced, performance-boosted 18A-P process node officially entered its risk production phase. This move serves as a blueprint for both Intel chips and processors the company plans to build for foundry customers.

“The current capacity crunch is probably emboldening customers to give Intel a harder look at this stage than perhaps they might ordinarily be inclined to do as the prospect of more advanced capacity will take on higher value in a constrained environment,” wrote Bernstein analyst Stacy Rasgon. “We are sure that Trump’s encouragement is at least not going to hurt though.”

Momentum was built around Intel Foundry services as surging global AI demand continuously outpaced capacity. Earlier this month, Google reportedly placed an order with Intel to manufacture more than 3 million of its increasingly popular tensor processing unit chips in 2028. According to the report, Nvidia is also testing to see if Intel could manufacture its next-gen Feynman chips.

markets

Stocks rise after US, Iran sign peace plan

Stocks rose Thursday morning after President Trump and Iranian President Masoud Pezeshkian signed a memorandum of understanding aimed at ending the war, in another sign that a months-long war that caused energy prices to spike could be coming to an end.

Trump signed the MOU before a dinner in Versailles, France on Wednesday evening. The president previously announced that a deal had been reached on Sunday evening, saying that traffic through the Strait of Hormuz would resume and that the US naval blockade would be lifted.

The deal comes after both sides exchanged attacks last week, escalating tensions to some of the highest levels since the US and Israel struck Iran in late February.

The price of Brent Crude ticked even lower after dropping on Sunday, sitting at about $76 a barrel. Oil giants like Shell, Chevron and Exxon fell on the news, as average gas prices in the US dropped below $4 for the first time in months.

Futures for the S&P 500 and Nasdaq Composite rose 0.9% and 1.5%, respectively. Last week, inflation readings for May showed both wholesale inflation and consumer prices rose in large part because of higher energy costs.

Signs of the peace deal have also lead to buying of momentum stocks this week. iShares MSCI USA Momentum Factor ETFrose another 1.46% in premarket trading.

Latest Stories

Sherwood Media, LLC and Chartr Limited produce fresh and unique perspectives on topical financial news and are fully owned subsidiaries 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, Robinhood Money, LLC, Robinhood U.K. Ltd, Robinhood Derivatives, LLC, Robinhood Gold, LLC, Robinhood Asset Management, LLC, Robinhood Credit, Inc., Robinhood Ventures DE, LLC and, where applicable, its managed investment vehicles.