Consumer Sentiment Index

What is the Consumer Sentiment Index?

The Consumer Sentiment Index is an economic indicator that prioritize consumer opinions on the health of the economy. It takes into consideration individuals’ feelings about their personal financial situations as wells as their opinions on both the short and long-term health of the economy. It is important to analyze these trends over an extended period of time. Looking at the difference month over month can be misleading.

Why is the Consumer Sentiment Index important?

Consumer sentiment can go a long way when looking into the health of the economy. This is because about 70% of gross domestic product is driven by consumer spending. When consumers are confident about the future they’re more likely to spend money. Low confidence can mean people save more and spend less on non-essentials. This can impact demand, the stock market, and even employment.

What should you do?

Review the Consumer Sentiment Index and analyze the last four to five months of data. This will allow you to get a clear picture of what consumers’ attitude toward the economy looks like. You can also see how demand is being influenced by consumer choices. Majestic’s CORE Report follows the Consumer Sentiment Index; along with other indicators every week to see where the market stands.

Source: Investopedia.com