That’s what New York attorney general Eric Schneiderman called a recently discontinued practice by the U-M’s Institute for Social Research. For the last five years, Thomson Reuters Corporation paid the ISR up to $1.2 million annually for the right to distribute the results of the institute’s monthly consumer confidence survey. Thomson Reuters then gave its clients key numbers from the survey five minutes before the ISR posted them on its website. An elite group got an even more valuable head start: they paid Thomson Reuters up to $6,000 a month to get the results in digital form two seconds before anyone else.
The confidence survey is watched intently as an indicator of where the economy is headed, and stock prices often rise or fall when it’s released. Computers now execute trades so quickly that those two seconds gave high-speed traders plenty of time to anticipate–and profit from–those moves.
An ISR employee who spoke to the Observer under condition of anonymity described the deal as “almost a point of pride,” recalling a project manager who referred to it as an indicator of “how influential and important” the study was. But in 2012, Bloomberg News strongly criticized the arrangement in a letter to then U-M president Mary Sue Coleman. The following year, the Wall Street Journal ran a front-page story about Thomson Reuters’ early release of the results, and Schneiderman announced an investigation.
University spokesperson Rick Fitzgerald says “there was no official action taken regarding the early release,” but, under pressure from Schneiderman, Thomson Reuters agreed to suspend the two-second head start. Its five-year contract expired at the end of last year, and the new bid was won by Bloomberg News’ parent company, Bloomberg L.P. Fitzgerald says Bloomberg is paying $2 million a year to distribute the survey results–which now go out to everyone at once.
Enjoyed reading about the importance of U of M’s Institute for Social Research (ISR) consumer confidence survey’s effect on the direction of the U.S. economy.
Back in the late 1970s, when I was a Recreational Vehicle Industry Association (RVIA) director of the board and the marketing committee chair, the Recreational Vehicle (RV) industry did not understand their consumer. So, we approached ISR (who had long been working with the auto industry) if they would be interested in also helping the RV industry define the demographics of the RV consumer (through their monthly consumer survey).
They agreed and were able to clearly provide not only the consumer demographics but also provided market information that was beneficial to the association members.
For example, ISR discovered in their survey that 11% of the usage of RVs (primarily motorhomes) came from families outside the U.S. who flew into vacation destinations here (like Disney World) and then rented a RV to explore other sites (like national parks) within the United States. This new knowledge resulted in new dealers locating RV rental sites next to these fly-in major vacation site destinations.
Since the U.S. consumer thoughts/indentions determine the direction of the future U.S. economy, one question in the monthly ISR survey (“Do you expect that your family will be better or worse off one year from today?”) was critical to understanding the direction of the economy.
And since a RV is a high cost discretionary purchase, the change in this monthly ISR survey information gave the RV manufacturers and suppliers earlier insight than any other economic indicator (like the Stock Market direction, interest rates, etc.).
Personally, as a General Manager of the local Thetford Corporation (a supplier of over 90% of the RV industry with toilets), we were recognized by the RV industry in joining the ISR and RVIA organizations.
Bottom line: ISR is a significant asset to the automotive related industries in Michigan as well as the American economy.