consumer confidence index
Definition
A measure of
consumer optimism toward current
economic conditions. The consumer confidence
index was arbitrarily set at 100 in 1985 and is adjusted
monthly on the basis of a
survey of about 5,000 households. The index
considers consumer opinion on both current conditions (40% of the index) and
future expectations (the other 60%). The Consumer Confidence Index is closely watched because many
economists consider consumer optimism an important
indicator of the future health of the
economy.
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“
We had to check the consumer confidence index because we wanted to see how optimistic the consumers were going to be.
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As the job market has strengthen over the past 6 months, the consumer confidence index has also risen which bodes well for Black Friday sales later on this year.
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“
Survey based measures of household confidence, such as a consumer confidence index, can be used to gauge the future spending habits of consumers and thus affect valuations of stocks in the consumer discretionary sector.
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