FinancialEdge: Why Consumer Confidence Matters

Some economic indicators are subtle, nuanced or otherwise difficult to grasp straight off the page. Not so for consumer confidence. While economists and investors can debate just how significant this indicator is, most at least grudgingly agree that how consumers feel about the economy (and their personal financial situation) can be a self-fulfilling prophecy. Accordingly, investors should at least consider the trend of this indicator when it comes to investment decisions. This is particularly important for investors who rely on a robust consumer spending environment. (For more on the Index, read Understanding The Consumer Confidence Index.)

What is Consumer Confidence? 

Broadly speaking, consumer confidence numbers measure the degree of optimism that consumers feel in regards to the economy and their personal financial situations. There are two major indexes for investors to consider - the Consumer Confidence Index and the University of Michigan Consumer Sentiment Index.

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