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Sentiment In The United States

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In the United States, consumer sentiment is measured primarily using two measures: Consumer Confidence Index (CCI) and the University of Michigan Consumer Sentiment Index. Both of these measure the degree of optimism consumer’s express about the economy and their personal financial/employment situation. This is a key element in determining economic health, as 70% of economic activity comes from consumer spending. Consumer sentiment can both a positive and negative effect on the speed of an economic recovery.

Since consumer sentiment is a dimension of behavioral economics, there are a lot of factors that impact consumer confidence beyond their actual economic significance: unemployment, presidential elections, war, interest rates, inflation, federal budget, international news, terrorist attacks, oil prices, housing market, certain times of the year (fall, summer, etc.), and even the weather. Perceptions can change quickly, and the news media can widely influence consumer’s opinion of the state of the economy. …show more content…

If consumers are nervous, companies will cut back on production, hours and hiring, which in turn will make consumers even more nervous. Businesses may delay investing in expansion, banks will tighten the lending rules, and consumers will hold back on major purchases, like houses and

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