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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
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