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Consumer Confidence

In short

Survey-based measure of how optimistic consumers feel about the economy

Consumer confidence surveys ask regular people if they feel good or bad about the economy and their finances. Since consumer spending is 70% of GDP, when people feel bad, they spend less, and the economy slows.

Consumer confidence indices (Conference Board, University of Michigan) measure household sentiment about current and future economic conditions. Leading indicator for consumer spending, which drives ~70% of US GDP. Sharp drops in confidence often precede economic contractions.

Related concepts

  • GDP Growth — GDP growth measures how much the economy grew (or shrank). Think of it as the economy's report card. Above 2-3% is healthy. Two consecutive negative quarters = recession. Recessions hurt stocks but eventually lead to recoveries.
  • Unemployment Rate — The unemployment rate shows what percentage of people who want to work can't find a job. Below 5% is considered healthy. Very low unemployment (below 3.5%) can actually cause inflation as companies compete for workers.
  • Sentiment Score — The sentiment score blends news and social media signals into one number. Think of it as a thermometer for how the market 'feels' about a stock right now. Positive = optimistic; negative = pessimistic.
  • PMI (Purchasing Managers Index) — PMI asks business purchasing managers if activity is better or worse than last month. Above 50 means expansion; below 50 means contraction. It's one of the fastest economic indicators — released monthly before most other data.