If for some reason consumer confidence declines, consumers become less certain about their financial prospects, and they begin to spend less money; this in turn affects businesses as they begin to experience a decrease in sales.
Tips for Building Consumer Confidence in Your Company
- Walk the Talk. If you really want your customers to like, know, trust you AND refer you more business, you need to keep the promises you make and show up consistently.
- Cover Your Bases, OK? OK!
- Blow Your Own Horn.
- It is Not About You.
- Face Time Every Time.
- Say No!
- Show, Don't Tell.
- Customer "Law of Attraction"
The Conference Board Consumer Confidence Index® declined in December, after decreasing in November. The Index now stands at 88.6 (1985=100), down from 92.9 in November. The Present Situation Index – based on consumers' assessment of current business and labor market conditions – decreased sharply from 105.9 to 90.3.
If the most recent index is above 100, then consumers are more confident than they were in 1985. If it's below 100, they are less confident than during that time.
Consumer confidence is a lagging, not a leading, indicator: It tends to fall in the wake of stock market declines, rather than precede them.
Consumer confidence, measured by the Consumer Confidence Index (CCI), is defined as the degree of optimism about the state of the economy that consumers (like you and me) are expressing through their activities of saving and spending.
What most people don't realize—but what makes sense, when you think about it—is that stock market valuations are very highly correlated to consumer confidence. When people feel good and are spending, not only does the economy grow faster, but investors are more confident and more willing to pay up for investments.
It measures how confident consumers are about the overall state of the economy. Their confidence impacts their economic decisions—like their spending activity. As a result, consumer confidence is a key indicator for the overall shape of the economy. Consumer confidence usually increases when the economy expands.
Stagflation is term that describes a "perfect storm" of economic bad news: high unemployment, slow economic growth and high inflation. Businesses lay off employees to save money, which in turn decreases the purchasing power of consumers, which means less consumer spending and even slower economic growth.
When investors lose confidence, they tend to purchase fewer big-ticket items and postpone buying a new car. A prolonged slowdown in consumer purchasing will slow down the econ- omy as well. However, a depressed stock market also affects business investment.
Economists divide the factors of production into four categories: land, labor, capital, and entrepreneurship. The first factor of production is land, but this includes any natural resource used to produce goods and services.
In the United States of America, the U.S. consumer confidence index (CCI) is an economic indicator published by The Conference Board to measure consumer confidence, which is defined as the degree of optimism on the state of the U.S. economy that consumers are expressing through their activities of savings and spending.
