Consumer Confidence Index (CCI): How Consumer Trust Influences the Economic Growth

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In almost every area, consumers hold a strategic position against market. Their financial health, potential consumption power about commodities and services and their level of trust, will determine the economic and business health within a country. Herein, the Consumer Confidence Index comes to be an instrument which measures financial condition, consumption desires and the average confidence amongst consumers.

There are three main categories inside the CCI:

  1. Index of Consumer Sentiment: an instrument used to measure what people think and feel about current economy within a particular country.
  2. Current Economic Condition: a tool that is used to measure what people think about the current economic condition.
  3. Index of Consumer Expectation: a tool to measure what people think about the future economy for the six months ahead.

The CCI report is usually released by an independent foundation named “The Conference Board” which is also making report about The Leading Economic Indicators. The CCI report is typically issued on the last Tuesday, at the end of the current month. It’s released at about 10 P.M. in Western Indonesia Time.

Consumer Confidence Index consists of some information about what people think and feel about several things below:

  1. The current economy
  2. Their forecast about future economy for six months ahead
  3. Current employment condition
  4. Family total income for the six months ahead

All those questions must be filled out by positive, negative or neutral answer. The survey was conducted on five thousand families as the respondents.

It’s generally assumed that the CCI report is able to forecast consumer’s think about the government’s performance in making economic stability and wealth. If the consumption mood rises, it means the consumers’ consumption level is climbing up for the entire month. Thus, it will create a positive economic and business situation because the cash flow amongst people is also increased. People have a positive thinking about their standard of living, feeling happy and prosperous. The common situation is people will consume their money on housing sector or vehicle needs.

The increase in the CCI report at above 5% is usually showing a significant impact to the economic growth. At the end, this condition will make a significant role to strengthen its currency. But if it stated below 5%, it won’t be a significant impact. The worse case happens if the CCI reported a negative number, because it possibly a signal that the economic growth of a particular country is also negative or in other words, the economy of that country is not growing.

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