2. 1 CONSUMER CONFIDENCE Presented By: Courtney Cooper Sheyla Martinez

3. 2 What Is It?  The index measures how consumers feel about the upcoming six months and their plans to make purchases (or not)  The Consumer Confidence Index is issued by the Conference Board.

4. 3 Consumer Confidence Measure Indicator  Frequency: Monthly Report  Published by: The Conference Board, University of Michigan, ABC News  Period coverage: varies  Market significance: moderate  Leading indicator of consumer spending

5. 4 Measuring The Index  The Conference Board surveys 5,000 U.S. households, each month  The 5 questions ask opinions about: 1.Current business conditions 2.Business conditions for the next 6 months 3.Current employment conditions 4.Employment conditions for the next 6 months 5.Total family income for the next 6 months  The questions are answered as positive, negative or neutral.

6. 5 Measuring The Index  The index values for all 5 questions are averaged, with weight, to form the Consumer Confidence index.  The average values for questions 1 & 3 form the Present Situation index. (weight = 40%)  The average values for questions 2, 4,& 5 form the Expectations index. (weight = 60%)

7. 6 Measuring The Index  The relative value is calculated as each question’s positive responses divided by the sum of its positive and negative responses.  The benchmark relative value, 100, was established in 1985.  The comparison between the relative value and the benchmark creates the index value.

8. 7 Consumer Confidence U.S. Regions  The index is calculated for the Unites States as a whole and for each of the country’s 9 census regions: New England:Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, VermontNew England:Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, Vermont Middle Atlantic: New Jersey, New York, PennsylvaniaMiddle Atlantic: New Jersey, New York, Pennsylvania South Atlantic:Delaware, Maryland, Washington DC, Virginia, West Virginia, North Carolina, South Carolina, Georgia, FloridaSouth Atlantic:Delaware, Maryland, Washington DC, Virginia, West Virginia, North Carolina, South Carolina, Georgia, Florida East North Central: Ohio, Indiana, Illinois, Michigan, WisconsinEast North Central: Ohio, Indiana, Illinois, Michigan, Wisconsin East South Central: Kentucky, Tennessee, Alabama, MississippiEast South Central: Kentucky, Tennessee, Alabama, Mississippi West North Central: Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, KansasWest North Central: Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, Kansas West South Central: Arkansas, Louisiana, Oklahoma, TexasWest South Central: Arkansas, Louisiana, Oklahoma, Texas Mountain: Montana, Idaho, Wyoming, Colorado, New Mexico, Arizona, Utah, NevadaMountain: Montana, Idaho, Wyoming, Colorado, New Mexico, Arizona, Utah, Nevada Pacific:Washington, Oregon, California, Alaska, HawaiiPacific:Washington, Oregon, California, Alaska, Hawaii

9. 8 9 Census Regions

10. 9 Keys To Interpreting The Data  It is important that you look at the trend rather than the month to month change.  Watching the trend will help cancel out sapling errors.

11. 10 The Consumer Confidence Index Recession Job cuts Terrorist attacks WAR

12. 11 Latest Release - April 24, 2007  The Consumer Confidence index decreased from 108.2 (March) to 104.0 (April) The Present Situation index decreased from 138.5 (March) to 131.3 (April)The Present Situation index decreased from 138.5 (March) to 131.3 (April) The Expectations index decreased from 87.9 (March) to 85.8 (April)The Expectations index decreased from 87.9 (March) to 85.8 (April)

13. 12 The Consumer Confidence Index April 2006-2007 108.2 104.0 109.8

14. 13 The Present Situation Index

15. 14 The Present Situation Index April 2006-2007 138.5 131.3 136.2

16. 15 Latest Release – April 24, 2007  The 1 year measure of consumer inflation expectations rose from 4.9% (March) to 5.2% (April)  The EUR-USD is above the 1.36 mark  The USD-JPY is under the 118.5 mark

17. 16 Latest Release – April 24, 2007  The number of people who planned to buy homes within 6 months decreased 0.5% - from 3.2% (March) to 2.7% (April)  The number of people who planned to buy cars within 6 months increased 0.6% - from 5.4% (March) to 6.0% (April)

18. 17 The Expectations Index

19. 18 The Expectations Index April 2006-2007 92.3 87.9 85.8

20. 19 The Implied Job Strength Index  Correlates closely with joblessness, inflation, and real incomes  The difference between “jobs are plentiful” and “jobs are hard to get” creates the Implied Job Strength index.  This index decreased 4 points – from 11.4 (March) to 7.4 (April). http://money.cnn.com/2007/04/24/news/economy/consumer_confidence.reut/money.cnn.com/2007/04/24/news/economy/consumer_confidence.reut

21. 20 Why Should We Care?  Consumer spending accounts for roughly two-thirds of our economy.  Consumer consumption represents about 56% of the GDP Durable goods, non-durable goods, and services.Durable goods, non-durable goods, and services.  Consumer sentiment is a predictor of how certain industries may do in the coming months.

22. 21 What Will The Fed Do?  Although consumer confidence has dropped, the Federal Reserve will not make any changes to the interest rate.  They will continue to monitor the changes in inflation.

23. 22 THANK YOU!