The three most prominent measures of consumer confidence in the U.S. economy are:

All average the results of 3 to 5 questions. The ICS and CCI each pose 5 questions to consumers: 2 questions about the present condition of the economy and 3 questions about expectations. In contrast, the COMF has only 3 questions, each focused on the present condition of the economy. [Click the graphic for a larger version.]

Besides different questions, many other aspects of the indices differ. Most important is sample size and mode of interviewing: the ICS relies on 500 monthly telephone interviews, the CCI is a monthly mail survey sent to 5,000 households (of which 3,500 typically reply), and the COMF uses a 4-week rolling average of 250 telephone interviews.

Both the ICS and CCI have renormalized their results during their history: for the ICS, 100 = consumer confidence in the month of December 1964; for the CCI, 100 = consumer confidence for the year 1985. In contrast, the scale for COMF is -100 (every respondent rates the economy poorly across all 3 questions) to +100 (every respondent rates the economy highly across all 3 questions).

The predictive power of U.S. consumer confidence measures have been analyzed for many different economic variables:

The challenge with such confidence measures is that consumer sentiment both shapes and reacts to economic changes.

While most of the above studies were based on the ICS, an investigation by the Federal Reserve Bank of New Yorkfound that the CCI offered greater forecasting power for most categories of spending.

Langer Research Associates, creators of COMF, report the following correlations:

In our work, we are less concerned about the relative merits of each separate index, finding each of them to offer value. Accordingly, we calculate the CCAI, the Consumer Confidence Average Index, across all three measures.

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