Retail Sales vs Consumer Sentiment
Live side-by-side comparison with current values, changes, and key statistics.
Why This Comparison Matters
Consumer sentiment surveys and actual retail sales often diverge. Consumers can feel terrible about the economy but keep spending (as happened through much of 2022-2023). When sentiment and spending both fall, the downturn is real. When sentiment plunges but spending holds, the labor market is likely still strong enough to support the consumer.
Cross-Asset Analysis
Retail Sales (ex Food Svc) (advance retail sales excluding food services, consumer spending momentum) and Consumer Sentiment (Michigan) (university of Michigan consumer sentiment index, how consumers feel about the economy) are priced in separate markets, yet their co-movement tells macro desks something neither series reveals alone. Late-cycle environments force Retail Sales (ex Food Svc) and Consumer Sentiment (Michigan) to express their respective defensive and cyclical tilts more sharply, making the spread a useful regime tell. Retail Sales (ex Food Svc) and Consumer Sentiment (Michigan) look similar at a glance, but the embedded factor tilts between them matter a great deal over time.
Structural changes inside Retail Sales (ex Food Svc) or Consumer Sentiment (Michigan), such as index reconstitution or methodology shifts, can break historical spread relationships in discrete jumps. Inside the Economic Activity universe, Retail Sales (ex Food Svc) and Consumer Sentiment (Michigan) represent different flavors of the same underlying exposure. Overlay strategies trade the Retail Sales (ex Food Svc)-Consumer Sentiment (Michigan) spread through options or swaps when the underlying pair is directly tradable, sizing against realized spread volatility.
Factor exposures embedded inside Retail Sales (ex Food Svc) and Consumer Sentiment (Michigan) drive their relative performance, with growth-value, large-small, and domestic-international all surfacing in the spread. Pairs trading between Retail Sales (ex Food Svc) and Consumer Sentiment (Michigan) is common because the spread is more stationary than either individual price, suitable for mean-reversion strategies.
90-Day Statistics
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Frequently Asked Questions
What is the relationship between Retail Sales (ex Food Svc) and Consumer Sentiment (Michigan)?+
Retail Sales (ex Food Svc) and Consumer Sentiment (Michigan) are connected through shared asset class exposure with different factor tilts. When the underlying asset class shifts, both respond, though with different sensitivities and at different speeds. The spread between Retail Sales (ex Food Svc) and Consumer Sentiment (Michigan) captures the specific macro signal that flows through this relationship.
When does Retail Sales (ex Food Svc) typically lead Consumer Sentiment (Michigan)?+
Retail Sales (ex Food Svc) tends to lead Consumer Sentiment (Michigan) during rotation episodes between the two factor exposures. In those periods, moves in Retail Sales (ex Food Svc) precede corresponding moves in Consumer Sentiment (Michigan) by days to weeks, depending on the transmission channel and the depth of each market.
How are Retail Sales (ex Food Svc) and Consumer Sentiment (Michigan) historically correlated?+
Long-run correlation between Retail Sales (ex Food Svc) and Consumer Sentiment (Michigan) varies by regime. Peers in the same asset class are highly correlated in direction, with the spread reflecting factor tilts and rotation dynamics. The correlation is not stable: it shifts with macro conditions, and the periods when it breaks down are often the most informative moments in the Retail Sales (ex Food Svc)-Consumer Sentiment (Michigan) relationship.
What macro conditions drive divergence between Retail Sales (ex Food Svc) and Consumer Sentiment (Michigan)?+
Divergence between Retail Sales (ex Food Svc) and Consumer Sentiment (Michigan) typically arises from index reconstitution, mega-cap earnings surprises, or liquidity differences between the peers. When one asset's idiosyncratic drivers dominate, the spread moves in ways that the common macro story does not predict, which is usually a signal to look more carefully at the specific drivers at work in Retail Sales (ex Food Svc) or Consumer Sentiment (Michigan).
Is Retail Sales (ex Food Svc) a hedge for Consumer Sentiment (Michigan)?+
Peers like Retail Sales (ex Food Svc) and Consumer Sentiment (Michigan) do not hedge each other; both rise or fall with the shared asset class, and using the pair as a spread trade is different from using it as a hedge. Effective hedging requires matching the hedge to the specific risk being protected, and the Retail Sales (ex Food Svc)-Consumer Sentiment (Michigan) pair is best stress-tested under scenarios the investor most worries about before being sized into a real portfolio.
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Data sourced from FRED, CoinGecko, CBOE, and other providers. This page is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results.