What Is Consumer Confidence?

Consumer confidence is defined as an individual’s optimism about the future state of the economy. This optimism is based on a number of factors, including current economic conditions, personal financial situation, and employment prospects.

When consumers are confident about the economy, they are more likely to spend money on big-ticket items, such as homes and cars. This increased spending boosts economic growth. Consumer confidence is therefore a key indicator of economic health.

There are several ways to measure consumer confidence. The most common is the Conference Board’s Consumer Confidence Index (CCI). The CCI surveys 5,000 households each month and asks respondents how they feel about current economic conditions and their prospects for the future. The index runs from 0 to 100, with a reading above 50 indicating positive consumer confidence and a reading below 50 indicating negative consumer confidence.

Other popular measures of consumer confidence include the University of Michigan’s Consumer Sentiment Index (CSI) and the Gallup Organization’s Economic Confidence Index (ECI).

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