WHAT IS 'Present Situation Index'

The Present Situation Index is a subindex that measures overall consumer sentiment regarding the present economic situation. This index is determined via survey conducted by The Conference Board, and is used to derive the Consumer Confidence Index. This is also sometimes known as the Current Situation Index.

BREAKING DOWN 'Present Situation Index'

 
The Present Situation Index is a subindex measuring overall customer sentiment regarding the current economic situation. Determined by survey conducted by the The Conference Board, this subindex comprises about 40 percent of the Consumer Confidence Index. Also known as Current Situation Index, this data for this indexes gathered from 5,000 households surveying current business and employment conditions.

Once The Conference Board conducts its appraisal of the present situation and calculates its value, the Present Situation Index is combined with another sub-index called the Expectations Index to form the Consumer Confidence Index.

Businesses often use this subindex to gain perspective on current market conditions and make more informed business decisions. When the Present Situation Index shows current business conditions as positive, this can be viewed as a positive signal that the economy is strong or in recovery.

The Conference Board

The Conference Board, Inc. is a non-profit, non-governmental business membership and research group organization, comprised of approximately 1,200 public and private member organizations from 60 countries. In addition to publishing widely tracked economic indicators including the CB Leading Index and the U.S. Consumer Confidence Index, The Conference Board conducts economic and business management research and convenes conferences and peer-learning groups.

Methodology and the Consumer Confidence Index

Participants in this survey are asked if they feel that current business conditions are good, bad or normal, and if they feel that current employment conditions are plentiful, not so plentiful or hard to get. Data from the survey is then combined with the Expectations Index, which is a subindex measuring overall consumer sentiment toward the short-term future economic situation, to form the Consumer Confidence Index.

The Consumer Confidence Index is a widely-used economic indicator published by the Conference Board, which serves as a barometer of the health of the U.S. economy from the perspective of the consumer. Based on consumer perceptions of current business and employment conditions, as well as expectations for the coming six months regarding business conditions, employment and income, the Consumer Confidence Index and its related measures are among the earliest sets of economic indicators available every month and serve as leading indicators for the U.S. economy.

The Consumer Confidence Index debuted in 1967 with a survey conducted every two months by mail. In 1977, the Conference Board began collecting and publishing consumer confidence data monthly. Since its inception, the Consumer Confidence Index has maintained consistent concepts, definitions, questions, and mail survey operations.

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