2.2k views
5 votes
Briefly explain what a Consumer Confidence Index (CCI) is and how does it work.

1 Answer

3 votes

Final answer:

The Consumer Confidence Index (CCI) is a measure of consumer sentiment towards the economy and personal finance. It is calculated using survey responses from individuals about their expectations for economic factors. A high CCI suggests optimism and increased spending, while a low CCI indicates uncertainty or negativity in the economy.

Step-by-step explanation:

The Consumer Confidence Index (CCI) is a measure of how optimistic or pessimistic consumers are about the state of the economy and their personal financial situation. It is based on a survey conducted by organizations such as the University of Michigan, which asks individuals about their current and future expectations regarding various economic factors. The index is calculated by aggregating these responses and assigning a numerical value to represent consumer sentiment.

For example, a high CCI indicates that consumers are confident in the economy and more likely to spend money, while a low CCI suggests that consumers are uncertain or negative about the economy and may be less willing to make purchases. The CCI can fluctuate over time based on economic conditions, government policies, and other factors.

The CCI is an important economic indicator because consumer spending drives a significant portion of the economy. When consumers are confident, they are more likely to purchase goods and services, which stimulates economic growth. On the other hand, when consumer confidence is low, it can lead to decreased spending and slower economic activity.

User Luis Montoya
by
8.2k points