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Macroeconomic

Explain why the results of Consumer Confidence and Consumer Expectations surveys are leading indicators in economic standing. c.
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The confidence indicators derived from consumer survey results are of significant important in assessing short-term economic developments. These sentiment indicators provide crucial information on consumer’s assessments of the current economic situation and their expectations and intentions for the future. When consumers become pessimistic they reduce their spending and increase their precautionary saving; and when they become optimistic they increase their spending. Thus the consumer confidence and consumer expectations provides an indication of future developments of households’ saving and consumption, based upon answers related to their expected financial situation, there can develop an idea about the general economic situation, capability of savings and unemployment, hence acts as a leading indicators in economic standing.

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