There are two consumer confidence indexes in the United States, namely the Consumer Confidence Index (CCI) provided by the Conference Board, and the Michigan’s Consumer Sentiment Index (MCSI) compiled by the University of Michigan. A large index indicates that consumers have a strong willingness to consume; a small index indicates that consumers have a low willingness to consume. According to historical experience, the U.S. consumer confidence index is often correlated with economic trends and is an important indicator of economic conditions. U.S. personal consumption accounts for nearly 70% of U.S. GDP. Therefore, consumers’ spending power directly affects the U.S. economic index, and their consumer confidence can more directly reflect or predict economic trends. When the consumer confidence index is high, it means that the economy is in an ideal positive development stage, or is about to move toward good development. On the contrary, when the consumer confidence index decreases, it indicates that economic development has stagnated or even reversed, or that a recession is imminent. The two consumer confidence indices are often used interchangeably, but there are some subtle differences in the specific production and outcome indicators. For example, CCI has a certain lag in actual use. For example, the current increase in the index may indicate economic growth in the past few months, while MCSI is more forward-looking, that is, an increase in the index means that consumers will increase consumption in the future and the economy will grow. The Consumer Confidence Index, or CCI for short, is a financial index managed and published by The Conference Board, which measures how optimistic or pessimistic consumers are about their financial situation. The higher the index, the more optimistic consumers are about their financial situation and the more confident they are to spend more. On the contrary, the lower the index, the more pessimistic the consumers are about their financial situation, the lower their confidence in consumption, and they will save more to replace consumption. The CCI was first calculated in 1985, using 100 as the base value at that time. During the statistical process, the Conference Board conducts surveys on a certain number of American families every month, which mainly consists of 5 questions, including: For the current situation: Respondents’ assessment of current business conditions Respondents’ evaluation of their current employment situation Expectations for the future: Respondents’ expectations of business conditions six months from now Respondents’ expectations for employment conditions six months from now Respondents’ expectations for total household income six months from now After obtaining the survey data, adjust it according to the proportion of different types of questions in the survey. The index of opinions on the current state accounts for 40% of the result, and the expectation of future conditions accounts for 60% of the index. Then the result value is obtained, compared with the baseline value of 100 in 1985. If the value is higher than 100, it means that consumers are more confident in spending than in 1985. If the value is lower than 100, it means that consumers are less confident in spending than in 1985. Statistical results will be released at 10 a.m. Eastern Time on the last Tuesday of each month. Personal consumption accounts for nearly 70% of U.S. GDP. The increase or decrease in consumer consumption will directly affect changes in GDP value, which in turn will reflect or affect the overall U.S. economic situation. When the CCI value increases, it means that consumers are optimistic about consumption. As consumption increases, it will stimulate the economy and accelerate economic development. When the CCI value decreases, it means that consumers are pessimistic about consumption and will reduce consumer spending. This will lead to a reduction in GDP and the possibility of a recession in the overall U.S. economy. In addition, manufacturers, banks and governments will monitor the change rate of CCI. When the change rate is higher than 5%, it means that the direction of economic development has changed or is about to change. Some economists believe that the numerical indication of CCI has a lag, because consumers need a certain amount of time to respond to economic events and changes. Therefore, changes in the current CCI value may reflect changes in the economy a few months ago. For example, the increase in the current CCI value may be due to the economic stimulus policy carried out a few months ago. What is Michigan’s Consumer Sentiment Index?
Michigan’s Consumer Sentiment Index, or MCSI for short, is a consumer confidence index provided by the University of Michigan. The data comes from a sample survey of ordinary American households. MSCI indicates the willingness of U.S. consumers to spend, as well as their confidence in their personal or family economic conditions, as well as their confidence in the overall economic situation. When the index is large, it means that consumers have strong willingness to consume; when the index is small, it means that consumers have low willingness to consume. The index was originally created in the 1940s by Professor George Katona of the Institute for Social Research at the University of Michigan. The index is compiled monthly and published on the University of Michigan Consumer Research website. MCSI uses the same five questions as CCI to study consumer confidence. The survey focuses more on opinions on future consumption, such as whether they will buy a car or real estate in the future, or whether they may receive a salary increase or be laid off in the future. Therefore, the MCSI's evaluation significance for the US economic development is more forward-looking than the CCI. From the changes in the MCSI, consumers' future consumption conditions can be estimated. When the MCSI value increases, it means that consumers are optimistic about the future and may consume more in the future. On the contrary, if the MCSI value decreases, it means that consumers may choose to save money rather than consume more in the future. However, an excessively high MCSI value will be considered an index value that is detrimental to economic development, because when people are overly enthusiastic about consumption and purchase a large number of goods and services, prices will rise sharply, which will cause significant inflation. At this time, the central bank usually increases borrowing costs by raising interest rates to appropriately curb inflation. Consumer Confidence Index Tracking In the chart below, the red line shows the trend of the consumer confidence index. Data Source: University of Michigan As can be seen from the chart above: Economic recessions are often accompanied by declining consumer confidence indexes. Take the 2008 subprime mortgage crisis as an example. The crisis began in December 2007 and lasted until July 2009. However, judging from the consumer confidence index, ICS has continued to decline since June 2007, from [88] in July 2007, to [59] in June 2008, and then experienced another shock, reaching the lowest point during that period [57.7], and has only continued to rise since March 2009. Then, the economic crisis finally ended. Therefore, keeping up with the U.S. Consumer Information Index is of great significance to household investment, consumption, and financial management. How to check the Consumer Confidence Index CCI? The index is released on the last Tuesday of each month at 10 a.m. ET and can be found by consumers and investors in the data section of the Conference Board's website. Step 1: Enter the official website of the Conference Board and enter the Economic Indicators section. Step 2: Find the Consumer Confidence Survey section. Step 3: You can find the Consumer Confidence Index in this section. Step 4: In this section, users can see more detailed analysis indexes, including index values classified according to age, income, region, etc. Step 5: Users can also view the Conference Board’s analysis of the Consumer Confidence Index through this link. How to check the consumer confidence index? Users can enter the University of Michigan Consumer Survey website to view its monthly consumer confidence index: What are the similarities and differences between CCI and MCSI? As the two most important consumer confidence indexes in the United States, CC I and MCSI have similarities and differences in production and use. Consumer Confident IndexMichigan’s Consumer Sentiment Index Release frequency once a month Investigation content
5 questions about consumers’ views on the present and future 5 questions are more focused on x consumers’ views on the future Content areas covered Personal finances; consumption situation; employment situation; Content focus Employment and Labor Market personal or family financial situation index meaning There is a certain lag, and the index results may be due to previous economic changes. It is forward-looking to a certain extent, and users can predict economic development trends through the index. More macroeconomics What is the Federal Reserve Balance Sheet? Explore the Fed’s 24 primary dealers What is the National Financial Conditions Index? Published by the Chicago Fed What is the Buffett indicator? Buffet Indicator What is the U.S. Treasury Volatility Index? Move Index What dollar index? US Dollar Index What are bank deposit reserves? Bank Reserves What are open market operations? Open Market Operations What is the reserve balance interest rate? Interest in Reserve Balances What is the Personal Consumption Expenditure Index? PCE Price Index What is an overnight reverse repo? ON Reverse Repurchase What is unemployment rate? Unemployment Rate What is non-farm payrolls data? Non Farm Payrolls What is the House Price Index? House Price Index What is money supply? Money Supply M0, M1, M2 What is the federal funds rate? Federal Funds Rate What is the Federal Reserve? Federal Reserve What is the inflation rate? Inflation Rate What is the U.S. Treasury yield curve? Yield Curve