Index of Consumer Sentiment: Two Rollercoaster Years


We launched the Index of Consumer Sentiment in October 2018. For the first six months it remained very static, and we began to worry that it might not be a useful indicator.  Then, through 2019, we started to see some big shifts up, with a real spike in consumer optimism about the future in January 2020.

Then…well, you know what happened then. It turned out the “big” shifts we’d seen in 2019 were not so big after all, as consumer sentiment fell off a cliff between January and April 2020. Since then we’ve seen consumer feelings about their own finances and the economy fluctuate as optimism and pessimism about the pandemic vie for dominance.

The measure – a reminder

The Index of Consumer Sentiment measures three things (using a total of 5 questions):

  • How people feel about their own financial situation

  • How people feel about the general economy in the short term

  • How people feel about the general economy in the longer term

As well as the overall index, there are two sub-indices – the Index of Current Economic Conditions (ICC), and the Index of Consumer Expectations (ICE). Comparing these gives a good sense of how customers feel right now versus their view of the future prospects for the economy.

Sentiment in late 2021

In July it looked like things were getting back on track, despite the lingering effects of the pandemic; but now it seems that broader economic shocks, such as the supply chain issues which have been extensively reported, have sent consumer confidence plummeting back down again.

Comparison to the USA

We have chosen a methodology that allows us to compare consumer sentiment in the UK with the University of Michigan’s Index of Consumer Sentiment1. This helps us to see that the pandemic is indeed a global phenomenon, and it does seem to suggest that the issues consumers are experiencing in the UK are reflected on the other side of the Atlantic as well.

We don’t, unfortunately, have precisely comparable data for the EU, but the EU Economic Sentiment Indicator (ESI) does give a rough benchmark of how consumers are feeling in the EU. It turns out that they have recovered much more strongly from the effects of the pandemic, and are now more confident than at any point in the history of the index (back to 2007). EU consumers do not seem to miss us! 

This is an important reminder that the Anglophone world is not the whole world, and the perceptions of consumers in markets that we don’t hear very much about, even if they’re not far away, can be very different to ours.

Beneath the index

To understand what’s really going on, we can look at the individual questions that make up each of the indices. The three headline index numbers are calculated from a combination of questions, each of which is expressed as an index based on positive versus negative answers. In other words, a score of 100 means that the same number of people gave a positive answer as gave a negative answer, and a score below 100 means that there were more negative answers. Let’s have a look at what’s happened to each of the five questions over time…

Breaking it down

It’s also valuable to see how views differ among different groups of UK consumers.

Conservative voters are more confident about the economy

For the first time in this wave we can look at how consumer sentiment varies according to voting intention, and the results are fascinating. People who would vote Conservative if there was an election tomorrow have far more confidence than others, particularly when it comes to their expectations for the future, while Labour voters are most pessimistic about the future of the economy. 

Men are more positive than women, especially since the pandemic

We have seen for some time now that men tend to score higher in the ICS — in fact they’ve scored higher than women in all but one wave — but the gap seems to have widened as a result of the pandemic, and has stayed around 7-10 points throughout 2021.

Young people are more confident about the future

Looking at how sentiment has varied for different age groups of consumers through the pandemic tells a very revealing story. 25 – 34 year olds have remained confident, and 45 – 64 year olds have remained relatively pessimistic throughout, but we’ve picked out the stories of the 18 – 24 year olds and the 65+ in the chart below.

Both grouped started in October 2018 in the middle of the pack, but the pandemic has created strong differences between them.

These differences become even more stark when we turn to perceptions about the future of the economy and their personal finances. Older consumers are more confident when it comes to their current economic position, but The Index of Consumer Expectations shows a clear and growing divide between younger consumers and older consumers on their view of the future. 


There’s a lot more data to dig into, but looking back over the 3 years of data we now have reveals some fascinating insights:

  • Consumer sentiment as measured by ICS is very sensitive to how people are feeling, and therefore an important indicator for businesses

  • The sub-indices (ICC and ICE) show that consumers are good at distinguishing their current position from their perceptions of the future

  • Consumers are again concerned about the future of the economy 

  • Consumers, particularly those aged 45 – 64, are beginning to worry more about their own financial situation. The two questions about personal finances are at record lows.

  • Consumers remain wary of making large purchases at the moment.

  • Confidence in the future of the economy bounced back strongly in 2021, but has fallen rapidly between July and October. This seems to be reflected in the USA, but less so in the EU.

Get in touch if you have any questions about the index, or if you’d like more details about the data and methodology, and keep your eyes open for future results.

Tom Kiralfy

Panel Manager
TLF Panel