Forex Walkthrough

AAA

Economics - Consumer Confidence Index


Release Date:
Last Tuesday of each month
Release Time:
10am Eastern Standard Time
Coverage:
Previous Month\'s Data
Released By:
The Conference Board
Latest Release:
http://www.conference-board.org/economics/consumerConfidence.cfm


Background
The Consumer Confidence Index (CCI) is a monthly release from the Conference Board, a non-profit business group that is highly regarded by investors and the Federal Reserve. CCI is a distinctive indicator, formed from survey results of more than 5,000 households and designed to gauge the relative financial health, spending power and overall confidence of the average American consumer.
There are three separate headline figures: one for how citizens feel currently (Index of Consumer Sentiment), one for how they feel the general economy is going (Current Economic Conditions), and the third for how they feel the economy will look in six months' time (Index of Consumer Expectations).
The Consumer Sentiment Index is a component of the Conference Board's template of economic indicators. Traditionally, changes in this index have tracked the leading edge of the business cycle relatively well.
What It Means for You
A strong consumer confidence report, especially at a time when the economy is lagging behind prevailing estimates, can move the currency markets quickly. The idea behind consumer confidence is that a happy consumer - one who feels that his or her standard of living is increasing - is more likely to spend more and make bigger purchases, like a new car or home, leading to a stronger domestic economy and consequently a stronger currency.
This is a highly subjective survey, and the results should be interpreted as such. People can grab onto a small state of affairs that garners a lot of mainstream press, such as gas prices, and use that as their basis for overall economic conditions.
As a result of its subjective nature and relatively small sample size, many economists will use moving averages of between three and six months for consumer confidence figures before predicting a major shift in sentiment. Some also feel that index level changes of at least five points or higher are necessary before calling for the reversal of an existing trend. In general, however, rising consumer confidence will trend in line with rising retail sales and personal consumption and expenditures - consumer-driven indicators that relate to spending patterns.
Strengths
-One of few indicators that reaches out to average households
-Has historically been a good predictor of consumer spending and, therefore, the gross domestic product (consumer spending makes upmore than two-thirdsof real GDP)
Weaknesses:
-A subjective survey with no physical data sets
-Small sample size (only 5,000 households)
-Survey results may contradict other indicators, such as GDP and the Labor Report
Commodities


Related Articles
  1. Economics

    Understanding The Consumer Confidence Index

    We look at this closely watched economic indicator to see what it means and how it's calculated.
  2. Investing Basics

    Consumer Confidence Index

    The Consumer Confidence Index is the result of a monthly survey of 5,000 U.S. households by the Conference Board that measures how optimistic or pessimistic consumers are about the economy's ...
  3. Retirement

    Consumer Confidence: A Killer Statistic

    The consumer confidence is key to any market economy, so investors need to learn the measures and how to analyze them.
  4. Fundamental Analysis

    4 Key Indicators That Move The Markets

    Find out what reports to watch in order to anticipate and react to market movements.
  5. Economics

    Consumer Confidence Down From Last Year

    Economic readings point to good times ahead. Consumer sentiment says something else. What is correct?
  6. Active Trading Fundamentals

    How To Read The Michigan Consumer Sentiment Index

    The Michigan Consumer Sentiment Index has provided a key leading indicator for investors and economists for decades. This respected index is published monthly from the results of random telephone ...
  7. Active Trading

    Leading Economic Indicators Predict Market Trends

    Leading indicators help investors to predict and react to where the market is headed.
  8. Investing Basics

    Economic Indicators That Do-It-Yourself Investors Should Know

    Understanding these investing tools will put the market in your hands.
  9. Financial Advisors

    Will Consumer Spending Save 2015?

    Consumer spending is considered an important number (and it is), but a savvy investor will always look at "why" rather than just "what." You should too.
  10. Savings

    The Top Ten Economic Indicators In The UK

    We list below ten key economic indicators for the United Kingdom, the world’s 6th-largest economy.
RELATED TERMS
  1. Consumer Confidence Index - CCI

    A survey by the Conference Board that measures how optimistic ...
  2. Consumer Sentiment

    A statistical measurement and economic indicator of the overall ...
  3. RBC Consumer Attitudes And Spending ...

    An index based on a monthly national survey of consumer attitudes ...
  4. Michigan Consumer Sentiment Index ...

    A survey of consumer confidence conducted by the University of ...
  5. Westpac Consumer Confidence Index

    An index measuring the level of consumer confidence in Australia. ...
  6. Present Situation Index

    A subindex that measures overall consumer sentiments toward the ...
RELATED FAQS
  1. What's the difference between consumer confidence and consumer sentiment?

    There isn't a difference between consumer confidence and consumer sentiment. Both terms are used to refer to the degree of ... Read Answer >>
  2. Why should an investor in the retail sector consider the Consumer Confidence Index?

    Learn how the Consumer Confidence Index works and why it is such a valuable tool for retail investors to predict future consumer ... Read Answer >>
  3. How should an investor interpret the consumer and business confidence index when ...

    Learn how investors benefit from watching the consumer and business confidence indexes, along with other key metrics, when ... Read Answer >>
  4. What economic indicators are important to consider when investing in the retail sector?

    Learn why the unemployment rate and Consumer Confidence Index are two of the best economic indicators when investing in the ... Read Answer >>
  5. Which economic factors most affect the demand for consumer goods?

    Understand how key economic factors such as inflation, unemployment, interest rates and consumer confidence affect the level ... Read Answer >>
  6. How do changes in interest rates affect the spending habits in the economy?

    Examine the factors that typically determine how consumers react to interest rate changes in terms of increasing their levels ... Read Answer >>
Hot Definitions
  1. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the mortgage ...
  2. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  3. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  4. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  5. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  6. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
Trading Center