What is the Consumer Confidence Index?

What is the Consumer Confidence Index?

The Consumer Confidence Index (CCI) is a survey, administered by The Conference Board, that measures how optimistic or pessimistic consumers are regarding their expected financial situation. 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.

The Conference Board’s Consumer Confidence Index (CCI) survey measures consumer attitudes and confidence regarding their financial prospects.

The CCI provides insight into U.S. economic conditions, including whether consumers might make major purchases, such as homes and automobiles.

The CCI measures and compares how consumers view the overall economy, business conditions, and labor market presently and over the next six months.

Interpreting the Consumer Confidence Index

The Consumer Confidence Index is benchmarked at 100, which was set in 1985. Released on the last Tuesday of every month at 10 a.m. E.T., a reading:

  • >100 indicates that consumers are more optimistic versus the benchmark.
  • = 100 indicates that consumers are neutral versus the benchmark.
  • <100 indicates that consumers are more pessimistic versus the benchmark.

Readings below 75 are considered moderately pessimistic, while readings above 125 are considered moderately optimistic. Regarding month-over-month changes in the index number, a month-over-month change of more than five points is considered significant.

For example, the released consumer confidence index reading for February 2022 was 110.5 versus 111.1 for January 2022. It means that consumers were more optimistic now than in 1985 but more pessimistic versus the previous month.

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The latest CCI release can be found here.

Latest Consumer Confidence Index (CCI)

As of Feb. 22, 2022, the Conference Board’s February CCI stood at 110.5, down from 111.1 in January. A current CCI above 100 means consumers are more optimistic than the benchmark CCI of 100 set in 1985. Conversely, if the current CCI were below 100, it would mean consumers were more pessimistic than in 1985.

The current business and labor market, measured by the Present Situation Index, rose to 145.1 in February 2022 versus 144.5 in January. However, the February Expectations Index fell to 87.5 versus 88.8 from the prior month.

The report stated that fewer consumers expected to make purchases of appliances, homes, and automobiles over the next six months.

Concerns surrounding the pace of rising prices within the economy—called inflation—rose again in February, after briefly declining in January and December from a 13-year high set in November 2021. The coronavirus pandemic and the latest omicron variant continued to remain concerning and, coupled with inflation, could negatively impact spending in the coming months.

Criticisms of the Consumer Confidence Index (CCI)

While some in the economic community see the CCI as a lagging indicator, the Organisation for Economic Co-operation and Development (OECD) considers consumer confidence a leading indicator, which would make the CCI a leading economic indicator for the U.S. economy.

 Leading indicators provide qualitative information used to monitor the current economic situation and as a warning of turning points in economic activity.