The Conference Board’s headline measure for future expectations has tanked. It plummeted 9.6 points, to a reading of only 65.2. That’s a fall to the lowest point we’ve prioritized in more than a decade. It is raising alarm bells and sparking fears of an impending recession. The measure is a major component of The Conference Board’s Consumer Confidence Index. Importantly, it serves as a key bellwether for overall consumer confidence and economic activity.
Eenormists and policymakers alike are glued to this metric, as it offers one of the best, forward-looking indicators of consumer confidence and economic activity yet to come. The new reading, which came in below the 80 threshold, is an early warning of growing economic storms on the horizon. This indicator is based on a detailed, monthly survey of consumers. It is an important and powerful economic indicator that affects business decision making real hard.
This sharp decline in consumer expectations is particularly worrisome because it indicates an overall pessimism at best and an extremely negative outlook at worst regarding future economic conditions. According to Stephanie Guichard, a senior economist of global indicators at The Conference Board, consumer optimism is on the wane. This economic downturn is forcing Americans to reassess their own financial circumstances in a very dire way.
"Consumers' optimism about future income — which had held up quite strongly in the past few months — largely vanished, suggesting worries about the economy and labor market have started to spread into consumers' assessments of their personal situations," said Stephanie Guichard.
The Conference Board’s future expectations measure is extremely important. It drives all of their economic forecasts and informs their business attraction efforts and government entity decision-making. Therefore, as a precious leading indicator of general economic activity, its downturn can have cascading implications through many sectors of the economy. Because it is a survey-based measure, it captures consumer perceptions about where they are headed financially. Beyond that, it gives us insight into the general mood of the economy.