Consumer confidence

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Forex News  Aug 18  Comment 
The US dollar today weakened against its main trading partner, the euro, despite positive consumer confidence data as tracked by the University of Michigan. The US dollar was depressed against the euro largely due to the uncertainty...
guardian.co.uk  Aug 6  Comment 
Visa index shows spending fell for third month in July as rising living costs and Brexit uncertainty hit confidence Britons are slashing spending on new clothes, cars and foreign holidays, according to new figures that underscore the effect on...
Financial Times  Jul 31  Comment 
Weak consumer confidence hurting Japan's economy
Financial Times  Jul 31  Comment 
Tumbling inflation and surging stock exchanges create buoyant mood
Clusterstock  Jul 28  Comment 
LONDON — Brits are more worried about the state of their finances and their ability to spend than at any time since the immediate aftermath of the Brexit vote, a closely watched survey of consumer confidence has shown. GfK's monthly consumer...
Financial Times  Jul 27  Comment 
Economists forecast that people will cut back as price rises outpace wage growth
Wall Street Journal  Jul 25  Comment 
A measure of U.S. consumer confidence rose sharply in July, as Americans expressed increased faith in current and future economic conditions.




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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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