Consumer confidence surveys are important private sector surveys even though economists view them as lagging indicators. Their importance lies in the confirmation of spending patterns and as consumption in developed countries may amount to 60%-70% of GDP, knowing how it is behaving is important for financial markets’ forecasts for GDP growth rates, which in turn flow into demand for credit and inflation rates.
The Conference Board Consumer Confidence Index is one of two U.S. consumer sentiment indices, the other being the University of Michigan’s Consumer Sentiment Index. The Conference Board’s index is based on perceptions of current business and employment conditions, as well as expectations of business conditions, employment and income six months into the future.
The latest release from the Conference Board’s April survey suggests U.S. consumers are optimistic about the near-term, although not as much as they were in March. The April reading came in at 120.3, down from March’s revised reading of 124.9 but well up on the 2016’s comparable figure of 94.2.
Since the GFC survey results have not been consistently over 100 and the months in which the index has been above 100 have been sporadic. However, since August 2016, all readings have been above 100 and recent months have returned almost boom-time conditions. As ANZ described it, “…the fall only partly reversed the surge in March, with the headline index still close to a 16-year high. The details point to a strong labour market with respondents saying that jobs are plentiful rather than hard to find, remaining close to a 16-year high…”
