Consumer confidence

RECENT NEWS
MarketWatch  Nov 26  Comment 
The final reading for the University of Michigan and Thomson Reuters consumer sentiment index for November was downwardly revised, to 88.8 from 89.4. That's still the best reading since July 2007, though below the 90.1 seen in a...
Clusterstock  Nov 26  Comment 
Consumer confidence remains at a seven-year high. The final reading on November consumer confidence from the University of Michigan came in at 88.8, down slightly from the preliminary reading but still solid. Expectations were for the reading...
SeekingAlpha  Nov 26  Comment 
Reuters  Nov 26  Comment 
U.S. stocks ended little changed on Tuesday as the U.S. economy grew more than expected last quarter but soft readings on consumer confidence and house prices kept major indexes in a tight range.
MarketWatch  Nov 25  Comment 
Surprisingly weak consumer confidence data pushes the dollar lower against the yen, euro and pound Tuesday as investors worry that consumers might be tamping down spending ahead of the holiday shopping season.
Yahoo  Nov 25  Comment 
U.S. consumer confidence fell in November to its lowest level since June as optimism waned in the short-term outlook for business conditions and jobs, according to a private sector report released on Tuesday. ...
Wall Street Journal  Nov 25  Comment 
Yahoo  Nov 25  Comment 
U.S. stocks were little changed on Tuesday, with major indexes hovering at record levels after a pair of economic datapoints painted a mixed picture of the market fundamentals. A reading of consumer confidence ...
USAToday.com  Nov 25  Comment 
Consumer confidence slipped this month, but the economy outperformed estimates in Q3.




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Consumer confidence is a term for consumers' level of optimism about the economy. It is used to capture people's perception, rather than the actual state, of the economy. Consumer confidence affects consumption, which accounted for 74% of the US Gross Domestic Product in the first quarter of 2008.[1] This is because people tend to adjust their spending based of expectation of the future. Factors such as changes in employment levels, increase/decrease in gasoline prices, inflation expectations and major events, e.g. terrorist attacks, hurricanes and ending a war, affects consumer confidence. Consumer confidence tends to vary from country to country.

Measures of Consumer Confidence

[[Image:Mich_cc.jpg|right|thumb|450px|University of Michigan Consumer Sentiment Index (Jan 1978- Jan 2008)[2]

Who is affected by changes in consumer confidence

Consumer confidence affects consumption, which accounted for 74% of the US Gross Domestic Product in the first quarter of 2008.[3] This is because people tend to adjust their spending based of expectation of the future. Lower consumer confidence, leads to lower overall spending and vice versa. Economists have concluded that spending on durable goods, such as cars and computers, is affected more than spending on non-durable goods, such as food -- since, consumers tend to put off the high budget items till they feel comfortable about purchasing them.[4] High consumer confidence bodes well for almost all types of businesses.

The type of businesses that are affected most by changes in consumer confidence are:

The type of businesses that are affected least by changes in consumer confidence are:

References

  1. Bureau of Economic analysis, Retrieved 7/30/2008
  2. Data from University of Michigan, retrieved 7/30/2008</ref two studies: The US Consumer Confidencitions for the next six months, current employment conditions, employment conditions for the next six m The University of Michigan Consumer Sentiment Index, calculated and published by the University of Michigan each month, is measured by conducting a phone survey of at least 500 households. The survey contains 50 questions focusing on three broad areas: personal finances, business conditions, and buying conditionber of 1964.<ref>[http://www.sca.isr.umich.edu/documents.php?c=i University of Michigan Consumer Sentiment Index: Survey Information, retrieved 07/25/08]</li> <li id="_note-2">[[#_ref-2|↑]] [http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=5&FirstYear=2007&LastYear=2008&Freq=Qtr Bureau of Economic analysis, Retrieved 7/30/2008]</li> <li id="_note-3">[[#_ref-3|↑]] [http://news.bbc.co.uk/1/hi/business/1561162.stm Why Consumer Confidence Matters?, BBC New, Retrieved 7/20/2008]</li></ol></ref>
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