Are You A Confident Consumer?
August 25, 2009 by Tisa Silver
Filed under Finance
News outlets reported that an increase in consumer confidence sent the stock market higher today. What exactly is consumer confidence and why is it so important?
The Consumer Confidence Index (CCI) is supposed to reflect American sentiment regarding the economy.
Photo by richkidsunite, courtesy of flickr
Sentiment ranges from pessimistic to optimistic (with neutral in between), and is gauged by the Conference Board. The Board surveys 5,000 households, for information on their saving and spending activities.
According to Wikipedia, forty percent of the index’s value is based on opinions about current conditions and the remaining sixty percent is based on future economic expectations.
The index is based on a benchmark value of 100, with higher numbers representing higher confidence.
The CCI is published each month, and this month analysts expected a reading of 47.5. The actual reading came in at 54.1.
Even though the reading itself isn’t really positive, it’s less negative so it made for a positive surprise.
Has the optimism spread to your household or are you feeling neutral or less pessimistic about the economy?
I’m not what I would call a confident consumer. I’m still watching what I spend very closely, and not sticking my neck out on any big purchases. I’m still thinking there are more rough times ahead, and don’t see a strong economic recovery in our future.