Consumer Confidence Drives Consumer Spending Index Growth of Consumer Confidence and Durable Goods 2007 to 2015 YTD
December 18,
2015 by in General 
This is the third in a series of four factoids exploring the impact of consumer confidence on a rising demand for consumer products, especially durable goods. Consumer confidence, measured monthly by The Conference Board, is “a barometer of the health of the U.S. economy from the perspective of the consumer”.
Consumer Confidence is perhaps the prime external driver of consumer spending. Population and household formations form the base for growth in spending; however, Consumer Confidence drives demand, especially when it comes to durable goods.
New Motor Vehicles follows a similar trajectory as Consumer Confidence with personal consumption dropping dramatically from 2007 to 2009 (down 29 percent) before climbing an average of 8 percent to a 2015 YTD index of 119. Also dipping in 2009, although only 15.8 points compared to 29 points for New Motor Vehicles, consumption of Furniture and Home Furnishing items rebounded by 23 percent from 2009 to 2015ytd. After peaking in 2008, the Video and Audio Equipment Industry experienced a slight downturn due to the Recession but overall has been flat for the past 8 years.
Confidence has a lesser impact on non-durable goods, like food and clothing, which tend to avoid the peaks and valleys of confidence swings more so than durable goods.
The next and final factoid in this series will show the relationship between Consumer Confidence and Housing – the other piece of the consumer spending pie.
Source: The Conference Board: Consumer Confidence Index, Bureau of Economic Analysis