There are several groups that measure consumer confidence or sentiment, but probably the most widely known is the monthly report from the conference board. Their consumer confidence report is released the last Tuesday of every month, and is based on responses from as many as 5000 households. An entirely new set of households are queried every month, but rarely do they all respond. From “The secrets of economic indicators”, the respondents are asked for a simple 3 state answer, based on the following key questions:

  1. How would you rate the present general business conditions in your area? Good, normal or bad?
  2. Six months from now, do you think they will be better, the same, or worse?
  3. What would you say about available jobs in your area right now? Plenty, not so many, or hard to get?
  4. Six months from now, do you think there will be more jobs, the same, or fewer jobs?
  5. What would you guess your total family income to be six months from now? Higher, the same, or lower?

Based on the responses to those questions, plus a few others, the conference board produces three seasonally adjusted headline indices:

  • The Present Situations Index reflects consumers’ attitudes about current conditions.
  • The Expectations Index represents how consumers feel conditions might change in the next six months.
  • The overall Consumer Confidence Index is based on a composite of the main five questions, with a 60/40 weighting for expectations vs current situation.

The consumer confidence monthly data can have an impact on the stock market, but it is somewhat erratic. Marketwatch reported at 7:18am pst that the Dow Jones Industrial Average lost over 100 points after the June consumer confidence number came in at 50.4, vs the May 58.1 reading. As of 9:10am pst, the Dow Jones had recovered earlier losses and was up over 15 points.