Consumer Confidence
Definition Consumer Confidence
This is the outlook that consumers have towards the economy and their own personal finance situation. The level of consumer confidence determines their willingness to spend, borrow and save. A high level of consumer confidence will encourage a higher marginal propensity to consumer; people will be more optimistic and willing to borrow more.
Factors That Affect Consumer Confidence
- House Prices – A form of wealth useful for Remortgaging
- Economic News – Depressing statistics about global and national economy will encourage saving
- Unemployment – The fear of rising unemployment will discourage consumers.
- Inflation and Real Wages
Measuring Consumer Confidence
- Surveys – Do you feel confident about next year?
- - "Are you optimistic or pessimistic about future."
- Saving ratios and levels of debt.
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