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Consumer confidence

Consumer confidence is a macroeconomic indicator calculated on the basis of a consumer survey and showing the expectations of the population regarding the economic situation in a country. The index reflects consumer confidence in the stability of the economy and allows you to assess the level of their material well-being, purchasing power, and confidence in the market.

In the course of the survey, respondents are usually asked questions about the general level of development of the country’s economy, about the situation with employment and unemployment, about the price level, and about their financial situation. All questions are given one of the following answers: “definitely positive,” “definitely negative,” “rather positive,” “rather negative,” or “neutral.” According to the methodology of the European Commission, private and generalized consumer confidence indices are calculated. Private indices represent the difference between the sum of the proportions of positive and negative answers to a particular question, and generalizing indices are calculated as the arithmetic mean of all private indices.

High values of the consumer confidence index indicate positive trends in the development of the country’s economy. If the values of this indicator decrease, then this may indicate a worsening situation in the economy, in which consumers begin to save more than they spend .

The consumer confidence index indicates to producers whether to increase their production volumes or, on the contrary, to reduce them. In addition, the rise in consumer confidence can serve as a signal for investors to start investing their resources in certain types of financial instruments.

Consumer Confidence Index data may be published monthly (for example, in the USA, Canada, Denmark, Argentina, Croatia, Czech Republic, Hungary, Portugal, Luxembourg, and Ireland) and quarterly (in Russia, Egypt, India, Norway, UAE, Switzerland, and Vietnam). The values of the indicator are measured in points and are calculated by statistics authorities (for example, in Slovakia), central banks (for example, in Belgium), research universities (in the USA, the index is calculated by the University of Michigan), and the European Commission (for example, in the Eurozone).

The graph below shows the dynamics of the value of the consumer confidence index in countries from different regions of the world from 2016 to 2021.

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