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The Consumer Confidence Index (CCI) is the output of a survey that can help with determining a consumer’s level of optimism or pessimism about the financial position of US businesses. We’re going to help define exactly what the CCI is. Ready to learn more? Then, keep reading.
The Consumer Confidence Index
The CCI works on the premise that if a consumer is optimistic then they’re more likely to make a purchase as opposed to when they’re pessimistic they’re less likely to.
The CCI is unveiled on the final Tuesday of each calendar month. There is widespread agreement that it offers an adequate measure of the confidence of US consumers. Basically, it’s a barometer of the health of the US economy which takes into account views of business and employment circumstances at a particular time. This includes how successful US business is perceived to be as well as money coming into the US businesses over the following six month period.
The CCI is determined based on the Consumer Confidence Survey. This survey looks at a sample of 2,000 questionnaires. In the beginning, in 1967, it was conducted every two months but has since changed to being conducted on a monthly basis since 1977.
Within the survey, five questions are posed. Question one and two are with regards to current economic situations while the latter three pertain to the future.
Questions that Gauge Consumer Confidence
Below are the questions asked when conducting the CCI survey for both The Present Situation Index and The Expectations Index. The Present Situation Index will fall under the first two questions asked while the three that follow will be those asked in The Expectations Index:
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Respondents’ appraisal of current business conditions
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Respondents’ appraisal of current employment conditions
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Respondents’ expectations regarding business conditions six months hence
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Respondents’ expectations regarding employment conditions six months hence
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Respondents’ expectations regarding their total family income six months hence
The answers to all of these questions can fall into one of three categories: positive, negative, or neutral. Whenever the data is collected, the relative value for each of them is totaled and then is compared with the results of the 1985 sample which is set to the standard of 100.
The Consumer Confidence Index Survey
For example, the most recent CCI as of February 2025 was 98.3. This is lower than the amount calculated from the month before. If the value is greater than 100 versus lower than 100, consumers can be deemed more (versus less) optimistic than they had been in previous years such as when the standard was met in 1985.
What the survey can tell is that, in this example, confidence decreased month over month and we can also compare historical values for more context. A low index means that consumers were concerned about the business conditions of that time as well as market conditions and income. If the Expectations index falls below the threshold of 80 that usually signals a high recession risk.
Conclusion
A consumer can be positive, negative, or neutral about the conditions and prospects of the US economy. This is marked by the CCI which is a survey that measures such perceptions. As of February 2025 for example, consumers tend to be more positive about the current conditions than future ones and the month over month decline is one of the highest it has been in a few years. By continuing to monitor on a monthly basis one can keep an eye on and react to any changes and trends. This ability makes the CCI a very valuable tool for economists, businesses, the government, and even for private individuals.
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