Consumer Confidence

Consumer confidence refers to the optimism of the consuming public about the economic future, as expressed by their economic behavior (specifically saving and spending). Since 1985, the United States consumer confidence index has been based on a monthly survey of 5,000 households. Many economists view consumer confidence as an important predictor of future trends, because optimistic consumers behave differently than pessimistic ones.

The consumer confidence index (CCI) is also important because it is used in specific ways. Whenever confidence levels dip below the designated break-even point (100) for two quarters in a row, the independent economic board that issues the CCI declares a recession. In addition, the Federal Reserve Bank considers the CCI when deciding whether or not to change interest rates