The Consumer Confidence Level
The Consumer Confidence Index (the CCI) is an indicator of how the economy is faring. The level of consumer confidence is considered by some to be the most important indicator since the majority of economic activity in the country is the result of the activities of households (consumers).
The Consumer Confidence Index is a 'leading' indicator - it provides insight into where the economy is headed, not where it has been. Household spending is sensitive. For example, a family may sit around one day discussing how the one or two working parents may feel about the security of their jobs, or that the price of gas is going up - and then decide right there and then to skip the vacation they planned for that summer. The family is not feeling confident about the current economic situation. This flows through an immediate effect of, for example, airline tickets not being bought; new swimsuits and vacation clothes are not purchased, and even as items as remote as scheduling time in the kennel for the family pet or not made. In a nutshell, a conversation lasting a few minutes in the living room can have an immediate effect on airlines, retailers, and services used by the family.
Flipping the coin, when a household feels confident, the vacation is planned, new purchases are made, services are scheduled; and then when on the vacation, the local economy where the family vacations gains - as new tangibles and services are consumed by the vacationing family.
The Consumer Confidence Level is measured and reported monthly by the Conference Board. The Conference Board is an independent research organization that provides indicator reports to several nations, including the U.S. The index is calculated using statistical sampling of 5000 households as representative of the U.S. economy as a whole. Using a snapshot of consumer confidence as it was in 1985, each month's report since is based on how the level of confidence fares compared to the level in 1985. Consumer Confidence is a useful indicator that does not need to be adjusted for prices, as it is a measure of expectation. The Consumer Price Index (CPI) is an indicator with a similar name but portrays a different snapshot of the economy. The CPI shows price change, and is an indicator of inflation.
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The Consumer Confidence Index is a 'leading' indicator - it provides insight into where the economy is headed, not where it has been. Household spending is sensitive. For example, a family may sit around one day discussing how the one or two working parents may feel about the security of their jobs, or that the price of gas is going up - and then decide right there and then to skip the vacation they planned for that summer. The family is not feeling confident about the current economic situation. This flows through an immediate effect of, for example, airline tickets not being bought; new swimsuits and vacation clothes are not purchased, and even as items as remote as scheduling time in the kennel for the family pet or not made. In a nutshell, a conversation lasting a few minutes in the living room can have an immediate effect on airlines, retailers, and services used by the family.
Flipping the coin, when a household feels confident, the vacation is planned, new purchases are made, services are scheduled; and then when on the vacation, the local economy where the family vacations gains - as new tangibles and services are consumed by the vacationing family.
The Consumer Confidence Level is measured and reported monthly by the Conference Board. The Conference Board is an independent research organization that provides indicator reports to several nations, including the U.S. The index is calculated using statistical sampling of 5000 households as representative of the U.S. economy as a whole. Using a snapshot of consumer confidence as it was in 1985, each month's report since is based on how the level of confidence fares compared to the level in 1985. Consumer Confidence is a useful indicator that does not need to be adjusted for prices, as it is a measure of expectation. The Consumer Price Index (CPI) is an indicator with a similar name but portrays a different snapshot of the economy. The CPI shows price change, and is an indicator of inflation.
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