Consumer Confidence

Consumer confidence is the degree of optimism households feel about their own financial situation and the wider economy, measured through regular surveys. When confidence is high, people tend to feel secure in their jobs and incomes and are more willing to spend and borrow; when it is low, they tend to save more and postpone large purchases. Because household consumption is the largest part of spending in most economies, confidence surveys are closely watched by governments, central banks, businesses and markets.

The best-known measures are the Conference Board's Consumer Confidence Index and the University of Michigan's Index of Consumer Sentiment in the United States, the European Commission's consumer confidence indicator for the EU and euro area, and similar surveys run by statistical offices and central banks elsewhere. Confidence is treated as one of the leading indicators of the business cycle and as a practical gauge of animal spirits.

Think of how a family talks at the kitchen table. If both parents feel their jobs are safe and expect a pay rise, they might book a holiday or replace the car. If they hear about layoffs and see grocery bills rising, they cancel plans and put money aside, even if nothing has changed for them yet.

Consumer confidence surveys ask thousands of households those kitchen-table questions every month. Adding up the answers gives a snapshot of the national mood, which often hints at what people will do with their money in the months ahead.

Most surveys ask a sample of households a short set of questions about current conditions and expectations, typically covering their own finances, general business conditions, the job market and whether it is a good time to buy durable goods. Many indexes are built from "balance" statistics:

• $B$ is the balance for one question, in percentage points.
• $\%\,\text{positive}$ is the share of respondents giving an optimistic answer, and $\%\,\text{negative}$ the share giving a pessimistic one.

If 30% of households expect their finances to improve and 45% expect them to worsen, the balance is $30 - 45 = -15$. The European Commission's indicator averages balances like this across several questions, so it is usually negative and is read for its direction and level compared with its long-run average. US indexes rescale the answers against a base year instead: the Conference Board index is set to 100 for 1985, and the Michigan index, from surveys that began in 1946, is based on 1966.

• Conference Board Consumer Confidence Index (US). Monthly, with separate Present Situation and Expectations indexes; in October 2026 the headline index rose 7.5 points to 91.7, according to the Conference Board, with the Present Situation Index at 120.4 and the Expectations Index at 72.6, still weak after three monthly declines.
• University of Michigan Surveys of Consumers (US). Monthly, with an Index of Consumer Sentiment and widely quoted questions on expected inflation.
• European Commission consumer confidence indicator. Part of the EU's harmonized business and consumer surveys, with a monthly flash estimate for the euro area and EU.
• National surveys. The UK's long-running GfK consumer confidence barometer, the Reserve Bank of India's consumer confidence survey and the State Bank of Pakistan's consumer confidence survey, conducted with the Institute of Business Administration, play similar roles. The OECD publishes harmonized consumer confidence series for many countries.

Falling confidence often precedes a slowdown, and sharp drops have accompanied most US recessions. Survey answers on expected inflation feed into central-bank thinking about monetary policy, because expectations can become self-fulfilling. Confidence is also strongly affected by unemployment, petrol and food prices, interest rates, stock market moves and the wealth effect of rising or falling house prices.

The link between confidence and actual spending is real but loose. In 2022 and 2023, US sentiment fell to very low levels while consumer spending kept growing, a gap some commentators called a "vibecession," reflecting anger about high prices more than lost income. Economists have also found that answers increasingly split along political lines, with supporters of the party in power reporting more optimism. For this reason, analysts treat confidence surveys as one input alongside hard data such as retail sales, wages and real-time indicators, adjusting for factors such as seasonal patterns and survey design rather than relying on any single headline number.

• The Conference Board: US Consumer Confidence
• University of Michigan: Surveys of Consumers
• European Commission: Business and consumer surveys