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Consumer Confidence Index

By: Mark Kleinschmidt

How the Consumer Confidence Index can help your business

As the CEO of your business, you worry about daily operations but you also need to be forward-looking and keep an eye on future economic conditions. Since most of us are not economists and do not have a crystal ball we have to make a best guess about where the economy is heading.

A good way to gain a better understanding about future economic conditions is to figure out how consumers (your customers) are thinking about the economic conditions.  You can get a good indication of consumer attitudes by checking out the Consumer Confidence Index.

The Consumer Confidence Index (CCI) is a survey administered by the Conference Board, which is affiliated with Nielson, the leading company providing information about consumers’ buying and watching habits. The CCI measures what consumers are feeling about their expected financial situation, whether they are optimistic or pessimistic. The CCI is based on the premise that if consumers are optimistic, they will spend more and stimulate the economy but if they are pessimistic then their spending patterns could lead to an economic slowdown or recession.

Every month since 1977 The Conference Board surveys over 3,000 households who are asked five questions, the first two relate to present economic conditions while the remaining three are related to future expectations. If you look at the graph, you can see the ups and downs of consumer confidence since 2007. It reached its highest point in 2019 right before the pandemic. As you would expect, consumer confidence dropped radically when the pandemic took hold in the spring of 2020. Since then, there have been a series of ups and downs.

The January CCI was 115, which is up from the December reading of 108.  In the next few weeks, we will get the February numbers and hopefully the index will continue to go up. The improved confidence can be attributed to consumers seeing slower inflation and anticipating lower interest rates.  While future economic expectations are improving,  we are not back to the pre-pandemic peak of 139.  

You can find additional details about the Consumer Confidence Index at  the web site for The Conference Board.  This can help you gain additional insight into what consumers are thinking about future economic conditions which can help you make more informed decisions about the operation of your business.  As consumer optimism continues to go up so will consumer spending, let’s hope the CCI keeps going up!

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