Consumer Confidence

Who: Conference Board

When: Last Tuesday of the month

What: The Conference Board measures the level of consumer confidence by conducting a monthly survey of 5000 households. The index consists of two issues - consumers' optimism of current conditions, which makes up 40%, and their expectations for the future, which makes up 60%.

Why: A reading of 100 is average. Higher readings are above average and lower readings are below average. Consumer Confidence has a direct correlation to consumer spending, which accounts for two thirds of the economy. Consumer Confidence also has some correlation with joblessness, inflation, and real income. Typically only changes of five points or more are considered significant with higher numbers pointing to greater consumer spending. There are other pressures that change consumer spending other than consumer confidence, inflation, joblessness, and regional business issues. Consumer Confidence is used to predict the direction of Consumer Spending but because of other influences, higher Confidence won't always lead to higher Spending.