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Consumer Confidence Index (CCI)

Consumer Confidence Index (CCI)
EconomyEconomicsMacroeconomics

What Is the Consumer Confidence Index (CCI)?

The Consumer Confidence Index (CCI) is a survey, administered by The Conference Board, that measures how hopeful or cynical consumers are with respect to their expected financial situation. The CCI depends on the reason that assuming consumers are hopeful, they will spend more and invigorate the economy yet in the event that they are negative, their spending examples could lead to an economic slowdown or recession.

Understanding Consumer Confidence Index (CCI)

The CCI is delivered on the last Tuesday of each and every month, and it is widely viewed as the most sound check of U.S. consumer confidence. Basically, it is a barometer of the strength of the U.S. economy and depends on consumers' perceptions of current business and employment conditions, and their expectations for the business, employment, and income for the next six months. CCI is conducted by Nielsen, a global provider of information and analytics on consumers' buying and watching habits.

The Consumer Confidence Index depends on the Consumer Confidence Survey, which has an answering sample size of 3,000 polls. The survey was initially conducted like clockwork starting in 1967 however different to month to month tracking in 1977. There are five inquiries posed — two connected with present economic conditions and three connected with future expectations.

Current Situation Index

  • Respondents' appraisal of current business conditions
  • Respondents' appraisal of current employment conditions

Expectations Index

  • Respondents' expectations in regards to business conditions six months subsequently
  • Respondents' expectations in regards to employment conditions six months subsequently
  • Respondents' expectations in regards to their total family income six months subsequently

Every response can be replied with one of three responses: positive, negative, or neutral. There is likewise a present situation index, which is an average of two inquiries connected with current economic conditions. The responses to the next three inquiries form the basis for the expectations index.

When the data has been assembled, the relative value of each question is calculated, which is then compared against every relative value from 1985, which is set as a benchmark of 100. This comparison of the relative values results in an "index value" for each inquiry.

Most recent Consumer Confidence Index (CCI)

As of Feb. 22, 2022, the Conference Board's February CCI remained at 110.5, down from 111.1 in January. A current CCI over 100 means consumers are more hopeful than the benchmark CCI of 100 set in 1985. Conversely, on the off chance that the current CCI were below 100, it would mean consumers were more cynical than in 1985.

The current business and labor market, estimated by the Present Situation Index, rose to 145.1 in February 2022 versus 144.5 in January. In any case, the February Expectations Index tumbled to 87.5 versus 88.8 from the prior month.

The report stated that less consumers expected to make purchases of machines, homes, and vehicles over the course of the next six months.

Concerns encompassing the pace of rising prices inside the economy — called inflation — rose again in February, after momentarily declining in January and December from a 13-year high set in November 2021. The coronavirus pandemic and the most recent omicron variation continued to remain concerning and, coupled with inflation, could negatively impact spending before very long.

Reactions 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 give qualitative information used to monitor the current economic situation and as an advance notice of defining moments in economic activity.

Special Considerations

The Conference Board is a global, independent business enrollment and research association. It was formed in 1916, and its mission is to furnish the world's leading organizations with the commonsense information they need to work on their performance and better serve society. The Board is intended to help its individuals comprehend and explore the most critical issues of right now. The Board likewise conducts research and discussions where business leaders convene. These bits of knowledge feed into its research and meeting plans.

Highlights

  • The CCI measures and compares how consumers view the overall economy, business conditions, and labor market by and by and over the course of the next six months.
  • The CCI induces that when consumers are hopeful, they spend more, animating the economy, yet while cynical, spending declines.
  • The Conference Board's Consumer Confidence Index (CCI) survey measures consumer perspectives and confidence with respect to their financial possibilities.
  • The CCI gives understanding into U.S. economic conditions, including whether consumers could make major purchases, like homes and vehicles.