Consumer Confidence Index: How to Interpret CCI Data

The Consumer Confidence Index (CCI) measures how optimistic or pessimistic US consumers are about personal finances and the overall economy. The Conference Board, a nonprofit organization that performs economic research, conducts the Consumer Confidence Survey and releases the CCI monthly.

The CCI is one of the leading indicators of US consumer confidence. Business leaders, academic economists, and specialists at the Federal Reserve use the CCI to understand historical data about consumer spending better and make policy decisions about interest rates.

The Consumer Confidence Survey comprises five questions about consumers’ present and future financial conditions. The first part of the survey, the Present Situation Index, asks consumers how they feel about current employment and business conditions. In the Expectations index, consumers share the outlook of their household finances in six months. Respondents answer each question as positive, neutral, or negative.

The Conference Board calculates the Consumer Confidence Index using the Consumer Confidence Survey responses. The research organization tallies and aggregates the responses and compares them against a baseline of 100. This relative value gives economists the current CCI.

If overall consumer sentiment is mostly positive, the report indicates a likely rise in economic activity. On the other hand, if consumer attitudes are mostly negative, consumers will likely spend less, potentially leading to a recession. The measurement offers a critical perspective on how everyday consumers feel about the US economy.

While many economic experts consider the CCI to be a valuable tool for learning about the US consumer and their attitudes, it does have some shortcomings. Some economists do not consider the CCI to be a useful predictive tool. The CCI relies on self-reported opinions, so it should not substitute other indicators like the Gross Domestic Product (GDP) or Consumer Price Index (CPI), which have harder data.

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