Consumer confidence

RECENT NEWS
Bloomberg  2 hrs ago  Comment 
American consumer confidence rose to the highest level in more than a year in September, as households’ views on the outlook for the economy brightened.
Bloomberg  4 hrs ago  Comment 
Clusterstock  2 hrs ago  Comment 
The University of Michigan's preliminary reading on September consumer confidence came in at 84.6.  Expectations were for the reading to come in at 83.5, up from 82.5 in August's final reading. That number soundly beat...
SeekingAlpha  Sep 11  Comment 
By Joseph Calhoun: By Jeffrey P. Snider Gallup's daily spending tracking poll dipped slightly in August, but what matters most is that spending levels have been flat now going back more than a year. There is no insight provided as to why that...
The Economic Times  Sep 10  Comment 
It lost 33.6 points to 5,574.3 at the close of trade. The benchmark rose 0.5 per cent on Tuesday.
The Australian  Sep 10  Comment 
CONCERNS about the federal budget are back and weighing on consumer confidence.
WA Business News  Sep 10  Comment 
Concerns about the federal budget are back and weighing on consumer confidence.
The Times of India  Sep 9  Comment 
This decline is primarily due to weakening in sentiment toward job security and willingness to spend on big-ticket items.
newratings.com  Sep 9  Comment 
TOKYO (dpa-AFX) - Consumer confidence in Japan decreased unexpectedly in August, data from the Cabinet Office showed Tuesday. The consumer confidence index fell to 41.2 in August from 41.5 in July. Economists had expected the index to rise to...
The Australian  Sep 9  Comment 
CONSUMER confidence has lifted, helped by continued low interest rates and rising housing prices.




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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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