The United State of America’s consumer confidence index (CCI) is the indicator of consumer confidence; it is defined as the expression of the degree of optimism over the economic state of the country by the consumers through their behaviour on spendings and savings.
This topic is relevant for all IAS exam aspirants.
How is the Consumer Confidence Index calculated?
TNS, a market information firm, conducts the surveys for the Conference Board. This process involves sending questionnaires on the first day of each month to 5,000 U.S. households by mail. A different group is surveyed each month, and each is screened to try to represent a demographic cross-section of the nation.
By the time preliminary results are published on the last Tuesday of each month, about half of the households surveyed have typically sent back responses.
Why is the consumer confidence index important?
The Consumer Confidence Index measures the degree of optimism of a group of buyers in the economy. If the degree of optimism is high, then economic growth is expected. This helps to understand the financial stability of the country.
Why is Consumer Confidence high at times?
When economic expansion occurs, consumer confidence is usually high. At that point, consumers tend to spend more than they do at other times, especially for bigger-ticket items and durable goods (e.g., automobiles and household appliances). The increase in consumer spending, in turn, helps the economy sustain its expansion.