The Consumer Confidence Index is calculated by The Conference Board, a business organization founded in 1914. It is based on a survey of consumers’ perceptions of current business and employment conditions, as well as their expectations for six months hence regarding business conditions, employment, and income.
The index for May stood at 83.0 (1985=100), up from 81.7 in April. This reflects increases in both consumer expectations and their take on the current situation. Lynn Franco, Director of Economic Indicators at The Conference Board said in a press release. “In fact, the percentage of consumers expecting their incomes to grow over the next six months is the highest since December 2007.” But the overall labor market indicators were mixed. Those anticipating more jobs in the months ahead increased to 15.4 percent from 14.7 percent, while those anticipating fewer jobs edged up to 18.3 percent from 18.0 percent. The proportion of consumers expecting their incomes to grow increased to 18.3 percent from 16.8 percent, but those expecting a drop in their incomes also increased, to 14.5 percent from 12.9 percent.
Consumer expectations can vary wildly throughout the year, reflecting the current news environment when the surveys were collected. Considering that the economic news, particularly on the employment front, has been improving since the end of the year, one would expect that confidence should be rising. In addition, consumers tend to look at the stock market as a gauge of how the economy is doing and in spite of the bad GDP numbers the markets continue to reach all-time highs.
We are not huge fans of consumer survey research, but the CCI has been around for a very long time, and long-term trends can be good gauges of large retail purchases (particularly of durable goods), mortgage lending activity, credit card use, and travel.
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