The consumer confidence indicator is a measure of the willingness of the working population to maintain or increase everyday and long-term expenses. Economists analyze the growth, stagnation or fall of the indicator relative to a statistically determined level of the population's needs, the dynamics of wages, as well as with an assessment of the increase, decrease in savings and an assessment of the country's economic development.
In developed countries, consumer spending can reach up to 75% of GDP, so consumer confidence in long-term economic growth or disappointment with reforms and government policies is a leading indicator.
Economic statistics tracks two indicators of consumer confidence:
- CCI Consumer Confidence Index
- Consumer sentiment index
The data is calculated based on tracking the moods of a sample of average households and is published monthly in two parameters – preliminary and updated (for the previous period) Conference Board. It is a non-profit global research structure that unites 60 countries and 1300 largest companies.
The company's website presents consumer sentiment by region and individual states, but the release of indicators of economic expectations of the US population has the greatest impact on the markets.
Consumer confidence indices in the US economy
Consumer Confidence Consumer Confidence (CCI) in the United States contains a history of measurements and calculations since 1967. This year's sentiment is taken as a starting point equal to the relative value of 100.
5,000 households are conducted to track five criteria of consumer confidence:
- Assessment of the current financial situation of the family relative to the previous period
- Revenue expectation for the annual period
- In the economic situation for the next year
- According to the personal assessment of unemployment data and possible risks of the economic crisis by family members
- Get data on large purchases
The index comes out in a three-digit value above 100, every 20th day of the month. The publication time is 10-00 North American Eastern time. The Michigan Institute additionally calculates an indicator of consumer sentiment, compiled from surveys of respondents, determining the potential of the opportunity to spend money. The indicator has the same relative dimension as CCI, it comes out twice for a period of one calendar month with a preliminary calculation figure in the second week and at the end with the final data.
The impact of consumer confidence indicators on Forex
Indicators of consumer confidence are published together with analysts ' forecasts, traders analyze and evaluate the discrepancy between actual and analytical data:
- In case of excess, the national currency is strengthened
- The negative discrepancy between the actual and predicted data leads to a fall in the currency The medium-and long-term reaction of investors is determined by the semi-annual trends of two indicators – positions change if clear, unambiguous trends of growth/decline. At the same time, the indicator values at the beginning of the selected "time window"are taken as the basis – the starting point of tracking.