The consumer confidence index 'fell' in August to the lowest point since October of 2011. Why should I care? What does it mean?
What is the Consumer Confidence Index? - This is an economic measure of consumer optimism. It is a unique survey compared to several others(such as the University of Michigan consumer sentiment survey). Two parts of the survey: 40% of the measure is the present concerns of consumers. How do you feel about costs (inflation), about your job and the stability of your income. The other 60% is a measure of your expectations.
Why is the Consumer Confidence Index measured monthly?- Your vision of the future and if you plan on buying a car or other higher ticket items matters. If you are worried about your job, you see others losing their jobs, you won't spend money. Then people who make the doo-dads you didn't buy will be laid off, then you will feel more nervous.
When consumers are confident about work and the future they shop, they buy things. The doo-dad makers needs more workers and adds a third shift. Those new hires buy things and the ebullience creates more confidence. Consumer spending is about 70% of all 'economic activity'. Our buying bread, cars, pens and computers keeps money moving and the economy strong. If consumer confidence drops, or rises, the consequence matters a great deal to you personally and to manufacturers, and other businesses.
August's number - was down to 60.6 It is the lowest number in nine-months. September's index will be released today (september 25th )
As a percentage of GDP -
The University of MI sentimnent survey:
Marion Syversen, MBA
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