The Conference Board’s consumer confidence index beat expectations in June as states began reopening and unemployment dropped. The index jumped from 85.9 in May to 98.1 in June. Economists polled by Dow Jones predicted that consumer confidence would reach 91.
Unlike most of the indicators we report on here, the consumer confidence index isn’t put out by a government agency. Instead, it’s a survey created by the Conference Board, a nonprofit business research group. Every month, the Conference Board surveys 5,000 households on their assessment of current economic conditions and income expectations six months down the road.
The index is considered a leading indicator by the Organization for Economic Cooperation and Development, meaning that it acts as a warning about future economic conditions, good or bad. If consumers feel optimistic, they’ll spend more money and stimulate the economy. If not, consumption in the United States could slow.
The consumer confidence index was 132.6 in February, and then crashed to 120 in March. After continuing to fall in April and May, it saw a three month high in June. The present situation index, a composite of survey responses regarding the current economic situation, also rose from 68.4 in May to 86.2 in June.
Consumer spending makes up over two thirds of economic activity in the United States, and the data suggests that spending is picking up. This (along with several other metrics) indicate that a recovery is underway, after the shortest, but sharpest recession on record.
The question that remains is what the recovery will look like. At first, analysts predicted that economic activity would take on a V shape, with a sharp plummet and equally stark bounce back. Now, things are looking more tenuous. Initial economic growth happened in the context of states reopening and businesses operating again. Now, with a rise in coronavirus cases, the gains in economic activity could be thrown back into question.