Consumer Confidence Index (2010-2021)
One of the most important things to always be on top of as an entrepreneur is the state of the economy—both present and future. Not only does it tell you how it may impact your business, but it can also arm you with the information you need to adjust your strategy going forward.
The consumer sentiment index is a common measure of this. According to the US consumer sentiment index by the University of Michigan, US consumer confidence has generally been growing over the past decade.
The index is calculated by asking consumers about their current financial situation benchmarked against what it was a year ago, as well as their expectations over the coming year. The number of negative responses is then compared against positive ones. The higher the index is, the better the economic situation and outlook.
The decade started off with an index of 71.8 in 2010 before falling to 67.3 in 2011. Up until 2019, aside from a slight dip of 1.0 from 92.9 in 2015 to 91.9 in 2016, the US consumer index had been increasing steadily.
Following the outbreak of COVID-19 in 2020, the US consumer sentiment was measured at 81.6, a 14.4-point fall from 2019.
Here’s a closer look at how US consumer confidence has evolved since the start of 2020.
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US Consumer Confidence in 2020 and 2021
The US consumer confidence index in 2020 started off on a high note, coming in at 96.4 in the first quarter of the year.
But as the effects of the coronavirus pandemic hit, states went into lockdowns, and businesses were forced to close, which resulted in layoffs. As a result, consumer sentiment fell to 74 in the second quarter. Not only was this a drastic 22.4-point plunge, it was also the biggest fall in at least a decade and the lowest point the index had been since Q4 2011.
US consumer confidence inched upward quarter after quarter since Q2 2020, recovering 1.6 points to hit 75.6 in the next quarter before rounding out the year at 79.8.
The rising sentiment continued through the first half of 2021, registering at 85.6 in the second quarter. This upward tick, however, did not last. US consumer confidence index fell to 74.8 in the third quarter and a further 4.9 points to 69.9 in the final quarter.