The Consumer Confidence Index (ICC) is an economic indicator that is used to predict the consumption behavior of individuals belonging to a specific economic system. In other words, it makes it possible to study the reception that the private sector has in a country's economy.
Broadly speaking, the ICC responds to the need to know the current perception of consumers and their future expectations for the country's economy, its family economy and employment, approaching the intentions of spending of individuals
What is the consumer confidence indicator for?
Before developing the functions of this indicator, it is convenient to take into account that each country has its own measurement system, as is the case, for example, in the United States, where we find the Consumer Confidence Index of the Conference Board, or Spain, where there is the Consumer Confidence Index (ICC), developed by the Sociological Research Center (CIS) since 2004.
According to the CIS, the objective of the ICC is "to anticipate the behaviors of best before date of citizens ", so its constitution" is based mainly on questions about consumer perceptions both in relation to recent economic evolution (6 months), and with respect to its potential evolution in the immediate future (6 months) ".
Thus, the ICC is an indicator that allows studying concepts related to the consumption of goods and services, and their direct effect on the economy and production of a country, in such a way that it tries to forecast the expenditure that people plan to make in a period of time and a given economic environment. In short, the ICC analyzes people's consumption or their savings in the short or long term.
How the ICC is calculated in Spain
The Consumer Confidence Index in Spain is based on a monthly survey of questions related to the forecast of household expenses and the perception of individuals about their personal economic situation and that of the country. To calculate the ICC, it is necessary to find the arithmetic mean of two indicators: the Current Situation Indicator (ISA) and the Expectations Indicator (IE). Each of these two Indicators is calculated through three other sub-indicators:
Current status indicator (ISA) = [(P3 + 100) + (P7 + 100) + (P8 + 100)] / 3
- To calculate this indicator, which refers to the assessment that consumers make of the current economic situation, the percentage of "best" responses minus the percentage of "worst" responses in the following questions is taken as a reference:
- Do you consider that the current economic situation of your home is better or worse than six months ago?
- Do you consider that the situation in Spain to find / improve a job is better or worse than six months ago?
- Do you consider that the current situation of the Spanish economy is better worse than six months ago?
Expectation Indicator (IE) = [(P9 + 100) + (P12 + 100) + (P14 + 100)] / 3
- To find this indicator, which reflects the economic situation expected by consumers for six months from now, the percentage of "best" responses minus the percentage of "worst" responses to the questions posed is taken as a reference:
- Do you consider that the situation in Spain to find / improve a job in six months will be better or worse than it is today?
- Do you think that the situation in your home in six months will be better or worse than it is today?
- Do you think that the situation of the Spanish economy in six months will be better or worse than the current one?
You can find more information about the Spanish ICC at:http://www.cis.es/cis/opencms/ES/13_Indicadores/Indicadores/ICC/index.jsp