Exploring the effects of the Consumer Confidence Index

Consumer confidence provides insight into future economic conditions

by Kristen Stephenson

Earlier this year, GPEC launched the Economic Monitor, a comprehensive web tool designed to provide timely, actionable insights into the state of the economy. Through an exploration of key economic indicators, the Economic Monitor offers a concise picture of health at both national and regional levels.

Each month, I’m diving into one of the indicators from the Monitor to share in greater detail what the metric measures are, why it matters to the economy and what the current numbers tell us. This month, we’re talking about consumer confidence.

What does consumer confidence measure?

Consumer confidence measures consumers’ feelings towards the overall economy. The higher the index value, the more confident consumers are about economic conditions.

There are a few different ways of tracking consumer confidence such as the University of Michigan Consumer Sentiment Index and the Conference Board Consumer Confidence Index. The economic monitor tracts the Organisation for Economic Co-operation and Development (OECD) Consumer Confidence Indicators, which measures business tendencies and consumer opinion surveys and allows for comparison between other major global markets and the OECD Business Confidence Index. The index baseline is set to 100 – anything above indicates increased confidence and any rate below 100 indicates declining confidence.

Why does consumer confidence matter?

Consumer confidence is a fairly reliable prediction of future economic conditions as it provides an indication of future household consumption and spending, based upon respondents’ answers about their expected financial situation and sentiment about the economic situation.

What do the current numbers say?

The most recent OECD consumer confidence index shows a reading of 98 for September 2023, unchanged compared to August 2023. This indicates a slightly pessimistic view of the economy going forward. However, this index is up compared to the same time last year when it read 96.6. The index was above 100 for a few months in mid-2021 but has otherwise remained below 100 since the beginning of the pandemic. This shows a general ongoing unease with economic conditions as concerns about inflation, consumer debt levels and finances persist.

Track trends in the Economic Monitor

To monitor consumer sentiment trends in real time along with me, mapped alongside 13 other key indicators of health, visit gpec.org/monitor. We hope you find the Monitor a valuable tool in understanding the ever-changing economic landscape.

See Economic Monitor