Consumer Confidence Index (CCI): Definition and What It Indicates

What Is the Consumer Confidence Index (CCI)?

The Consumer Confidence Index (CCI) is a survey administered by the Conference Board. The CCI measures what consumers are feeling about their expected financial situation, whether that's optimistic or pessimistic. The survey is based on the premise that if consumers are optimistic, they will spend more and stimulate the economy, but if they are pessimistic then their spending patterns could lead to an economic slowdown or recession.

Understanding the Consumer Confidence Index (CCI)

The CCI is released on the last Tuesday of every month and is widely regarded as the most credible gauge of U.S. consumer confidence. It is essentially a barometer of the health of the U.S. economy and is based on consumers' perceptions of current business and employment conditions and their expectations for the business, employment, and income for the next six months. The CCI is conducted by Nielsen, a global provider of information and analytics on consumers' buying and watching habits.

The Consumer Confidence Index is based on the Consumer Confidence Survey, which has a responding sample size of 3,000 questionnaires. The survey was initially conducted every two months starting in 1967 but changed to monthly tracking in 1977.

There are five questions asked in the survey. The first two relate to present economic conditions while the remaining three are related to future expectations.

Each response can be answered with one of three responses: positive, negative, or neutral.

Once the data has been gathered, the relative value of each question is calculated, which is then compared against each relative value from 1985, which is set as a benchmark of 100. This comparison of the relative values results in an index value for each question.

The Conference Board

The Conference Board is a global, independent business membership and research association. It was formed in 1916, and its mission is to provide the world’s leading organizations with the practical knowledge they need to improve their performance and better serve society.

The Board is designed to help its members understand and navigate the most critical issues of the present time. The Board also conducts research and forums where business leaders convene. These insights feed into its research and meeting agendas.

2024 Consumer Confidence Index

The CCI stood at 104.7 in March 2024, which is relatively flat from the previous month's reading of 104.8. A current CCI above 100 means consumers are more optimistic than the benchmark CCI of 100 set in 1985. When the current CCI falls below 100, it means consumers are more pessimistic than in 1985.

The business and labor market, measured by the Present Situation Index, increased to 151.0 in March 2024 from 147.6 in February 2024. The Expectations Index, which is based on short-term expectations of income, business, and labor, dropped to 73.8 from 76.3 between March and February 2024. A reading below 80 often signals a forthcoming recession.

Consumer confidence increased among people over the age of 55. According to the Conference Board, confidence wavered for people under 55. This was magnified by people who earned between $50,000 and $99,999. Elevated prices, including those at the pumps, continue to be a concern for most consumers. Recessionary fears were less pronounced among consumers, who seemed more concerned about the political landscape in the U.S.

In terms of spending, consumers said they planned to spend more on "heath care, motor vehicle services, and lodging for personal travel, but less on entertainment."

Lagging or Leading Indicator?

While some in the economic community see the CCI as a lagging indicator, the Organisation for Economic Co-operation and Development (OECD) considers consumer confidence a leading indicator, which would make the CCI a leading economic indicator for the U.S. economy. Leading indicators provide qualitative information used to monitor the current economic situation and are a warning of turning points in economic activity.

The Bottom Line

The Consumer Confidence Index is a widely watched economic index. Reported at the end of every month, the survey measures consumer sentiment about the current conditions of the economy as well as how they feel about where it is headed. Conducted and reported by the Conference Board, the index is seen as both a leading and lagging economic indicator—depending on who you ask.