Go to the St. Louis Federal Reserve FRED database, and find data on the University of Michigan’s consumer sentiment index (UMCSENT) and real personal consumption expenditures (PCECC96). Convert the consumer sentiment index to “Quarterly” using the frequency setting, and download the data.

Using the most recent data available, calculate the level change in the consumer sentiment index from the same time a year earlier, and the percentage change in consumption from a year earlier. Do these values behave as you would expect? Based on the change in consumer sentiment, how should permanent income have changed? Briefly explain.