Consumer confidence indices
The following are two indices that help assess the extent of optimism that consumers have in the economy:
- Conference Board Consumer Confidence Index (or CCI)
- University of Michigan Consumer Sentiment Index (or CSI)
Consumer confidence up in March
The Consumer Confidence Index is based on a monthly survey conducted by Nielsen for the Conference Board. The CCI relies on opinions on both current conditions as well as expectations of future conditions and is generally more volatile than the CSI. In March 2015, the CCI surged to 101.3. In February, the CCI dropped to 98.8 from 103.8 in January. The CCI was at 83.9 in March 2014.
According to the Conference Board, the index was up in March since consumers were optimistic about short-term job and income prospects. However, the proportion of consumers expecting improvement in business conditions over the short-term declined.
An upbeat consumer confidence in the economy may lead to higher spending at stores such as Macy’s (M), J.C. Penney (JCP), Dillard’s (DDS), and Nordstrom (JWN). Macy’s and Nordstrom together constitute 0.2% of the SPDR S&P 500 ETF (SPY) and 0.3% of the iShares Russell 1000 Growth ETF (IWF).
Consumer Sentiment Index
The CSI, which is published by the University of Michigan and Thomson Reuters, gave a different picture about consumer confidence in March. The index fell to 93.0 in March 2015 from 95.4 in February 2015. The decline seems to have been caused by slightly higher gas prices and bad weather. An earlier CSI reached an 11-year high of 98.1 in January 2015. The CSI stood at 80.0 in March 2014.
For more updates on the consumer and retail sector, visit Market Realist’s Consumer and Retail page.