Consumer Confidence vs. Stocks

Chart of the Week for March 05 - March 11, 2010

Economists consider the stock market to be a leading economic indicator; thus by definition, the stock market turns ahead of the economy and has a big influence on consumer confidence. This statement can be observed in the chart above with consumer confidence tending to reflect the movements of the stock market and often turning after the stock market has changed directions. While historically this pattern may be apparent, history may not repeat itself and is no guarantee of future results.

Consumer confidence is tracked each month by The Conference Board with a survey using a representative sample of 5,000 households to gauge overall consumer confidence on consumers' perception of current and future expectations of economic conditions. The yellow line in the chart above represents the Consumer Confidence Index, which tracks The Conference Board's survey data over time. The blue line represents the S&P 500 Index ("S&P 500") as a proxy for the U.S. stock market.

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