Consumer confidence

RECENT NEWS
The Hindu Business Line  9 hrs ago  Comment 
Majority of Indians bullish about job prospects, economic outlook
Forbes  Aug 31  Comment 
It's all about confidence. Do you as a consumer have confidence in the company you are buying from? What happens when that company starts to lose that consumer confidence? Samsung's recent hardware releases and its reaction to some of the...
Yahoo  Aug 28  Comment 
Plummeting stock prices have taken a toll on U.S. consumer confidence, though there are signs the setback may be temporary. The University of Michigan says its consumer sentiment index fell to 91.9 this ...
newratings.com  Aug 28  Comment 
WASHINGTON (dpa-AFX) - Potentially reflecting the recent sell-off on Wall Street, the University of Michigan released a report on Friday showing a bigger than previously estimated drop in U.S. consumer sentiment in the month of August. The report...
newratings.com  Aug 28  Comment 
BRUSSELS (dpa-AFX) - The University of Michigan's final consumer sentiment index for August has been released at 10:00 am ET Friday. Following the data, the greenback edged up against its major rivals. The greenback was trading at 1.1233...
newratings.com  Aug 28  Comment 
ROME (dpa-AFX) - Italy's consumer confidence improved more-than-expected in August, while business sentiment weakened unexpectedly, survey figures from ISTAT showed Friday. The consumer confidence index rose to 109.0 in August from 106.7 in...
Forbes  Aug 26  Comment 
For many years, the consensus view among economists and other business and policy experts has been that global economic interconnectedness is a strong and growing force. Recent data on levels of consumer confidence around the world as captured in...
Forbes  Aug 25  Comment 
Early indicators from the first week of August pointed towards a slightly more optimistic consumer, as confidence, happiness and other key markers were up. However, although these numbers are up month-over-month, they are below recent...
newratings.com  Aug 25  Comment 
BRUSSELS (dpa-AFX) - The U.S. new home sales for July and consumer confidence index for August are set to be published at 10:00 am ET Tuesday. The greenback traded mixed against the other major currencies before these reports. While the greenback...
Clusterstock  Aug 25  Comment 
The US consumer is confident. The Conference Board's index of confidence surged to 101.5 in August from 91.0 in July. This was much stronger than the 93.4 expected by economists. “Consumers’ assessment of current conditions was...




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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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