Ch#5 Consumer Confidence Measures

Question 1

Name 3 widely followed metrics

Answer 1

1 The University of Michigan
2 The Conference Board
3 ABC News and Money Magazine

Sometimes consumers worry about inflation more than unemployment, and at other times the reverse is true.

Question 2

Consumer Confidence Measures

Answer 2

Market Significance+ Moderate
Typical Release Time+ 10:00 AM EST Last Thursday of Month
Period Covered+ Current Month

Question 3

Can Current and Future expectations move in opposite directions

Answer 3

Yes, if tax increases are being discussed by Congress, then it is possible for the current conditions reading to be upbeat while the expectations component could be weak. Moreover, expectation indexes between conference board and university of Michigan series could diverge because of the differences in their forecast horizon

Question 4

Volatility of this Consumer Confidence Measures

Answer 4

ABC News poll least volatile, while Michigan was most volatile.

Every one point change in Michigan series will result in a two-point change in the conference board measure.

Question 5

Consumer Confidence Measure during business cycles

Answer 5

Weakest during recession, slightly better on average during recoveries. Classified by the Commerce Department as a leading economic indicator.

Question 6

Why people be dissing?

Answer 6

In the late 1950’s and again after the 1987 stock market crash, it is one of the best predictors of Presidential Elections. Economy Improves, Great Communicator, and shapes perceptions will lead to a win

Question 7

Relationship with other series

Answer 7

Often, consumer confidence and consumer spending will rise and fall at the same time, and sometimes spending increases will precede a pickup in confidence.

Question 8

What happens when the market gets depressed? :,(

Answer 8

Some marketing research even has shown that this triggers spending.