Consumer Confidence Index

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A survey of 5,000 consumers asking them how they feel about the current economy and their spending patterns. They will also be asked how confident they are about buying expensive consumer goods. The report is split into how people feel now and their expectations over the next few months.

Contents

How to Read It

A neutral level is in the region of 100. Figures below 75 are generally weak while levels above 125 are strong. A sharp drop in confidence can signal that the economy is weakening, but the correlation between spending and confidence figures is not very strong. Only index changes of at least five points should be considered significant.

Importance

A pessimistic consumer worries foreign investors in the U.S. markets. It raises the probability of falling interest rates and a weakening economy, both which are detrimental to the dollar's value. Foreign investors might sell the dollar and look for higher yields and a stronger economy elsewhere.

A optimistic consumer can raise interest rates and the stock market returns to levels that provide a higher return relative to other countries in the world, and reults in an increased demand for dollars.

Background

The Consumer Confidence Index measures how consumers feel about the economy, jobs, and spending. Happy consumers are more likely to shop, travel, and keep ecnomy strong. Unhappy consumers become protective of their wallets which is bad for the economy. This report can occasionally be helpful in predicting sudden shifts in consumption patterns. And since consumer spending accounts for two-thirds of the economy, its gives us insights about the direction of the economy. A neutral level is in the region of 100. Figures below 75 are generally weak while levels above 125 are strong. A sharp drop in confidence can signal that the economy is weakening, but the correlation between spending and confidence figures is not very strong.

Source

The Conference Board

Availability

It is released at 10:00am EST on the last Tuesday of the month being surveyed.

Frequency

Monthly.

Revisions

Minor revisions can occur as more survey results are collected and processed.

Additions

The Index of Consumer Confidence, more commonly referred to as the CCI or Consumer Confidence Index is a monthly report issued by an independent economic research organization called The Conference Board. The CCI is based on statistical data gathered from five thousand households and is considered an accurate measurement of how the general public view the United States economy for that month and even goes as far as to involves calculating the number of "help wanted" advertisements in local newspapers in order to determine just how tight the job market really is. This measurement is thought to be highly indicative of the consumption component of the GDP (Gross domestic product) and the Federal Reserve consults the CCI when seeking to determine changes to interest rates. The CCI also has the power to affect prices on the stock market. The base confidence level of the CCI is set at 100, as decided at the beginning of the index in 1985. The Conference Board is known to declare an economic recession whenever there occur two or more consecutive quarters where the confidence levels fall below 100. The data contained in the CCI is of a timely nature and is considered to be a predictor of movements in the business cycle. Although it bears remembering however that the report is just a survey and there are no actual data series to take figures from as only "planned spending" is collected as opposed to actual dollars spent, meaning that the CCI is unable to forecast the future.


Links

The Conference Board

Consumder Confidence Index news release

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