Member Logon
About Us
Free Trial
Investment Guide
Wall Street Update
Media Appearances



Consumer Confidence
By Bruce Mushial

At different times in our history we’ve focused more on certain economic data than others. At one point in our history the all-important data we watched for was the money supply, but now no one seems to care much about the M1 or M2 measures of the amount of money in circulation. Right now one of the areas we are focusing on is the consumer confidence data and the other related indicators that gauge what the consumer is thinking and doing. The reason for the focus on the consumer is simple: businesses to business sales are flat and it’s the consumer that is keeping the economy afloat. We’ve all heard of the consumer confidence numbers that are released each month, but where do they come from? How are they compiled? What can we learn from them?

     The consumer confidence data is a government report compiled each month by The Conference Board. A questionnaire is mailed out to 5,000 households the first week of the month. Approximately 3,500 of the forms are returned. The data is compiled and then released to the public at 10am on the last Tuesday of the month. The survey questions ask consumers about their current situation and their expectations for the next 6 months. Future expectations are weighted 60% in the index and current conditions make up 40%. The most recent report released on 8/29/01 showed that consumers in general were less optimistic about current economic conditions than they were in July. More families say current business conditions are “bad” – 14.9 percent now, compared with 14.6 percent a month ago. Those rating conditions as “good” declined slightly, from 28.5 percent to 28.2 percent. But the job market has begun to unsettle consumers.Those claiming jobs were “hard to get” rose from 14.1 percent to 15.9 percent. Those reporting jobs were “plentiful” fell from 35.6 percent to 33.4 percent. Consumers were a little more optimistic about business conditions for the next six months. Those expecting an improvement in business conditions increased from 17.2 percent to 18.9 percent. The percent of consumers expecting economic conditions to weaken declined from 11.2 percent to 10.7 percent. The employment outlook for the next six months was mixed. Currently, 16.0 percent of consumers expect more jobs to become available, up from 15.0 percent last month. But those expecting fewer jobs through the end of this year advanced from 16.4 percent to 17.8 percent. Slightly more American families are expecting their incomes to rise: 22.4 percent are anticipating larger paychecks six months from now, up from 22.1 percent last month.

     There are other economic reports that track various data about consumers. Each month personal income data is compiled by the Bureau of Economic Analysis and is released during the third or forth week of the month. The report from the BEA also contains data on personal consumption, durable and non-durable goods purchases, and disposable income. Retails Sales data is reported monthly and shows how consumers are, or are not spending their money. The Consumer Credit report shows whether consumers are increasing or decreasing credit card balances. Each report gives a window into consumer confidence. Increased spending is a good indicator for the economy since most people tend to keep their hands on their wallets as the circumstances around them become less secure.


View our Past News Articles