What Is the Consumer Sentiment Index

The consumer sentiment index is a measure, obtained through surveys, of how people feel about current and future economic conditions. It combines responses to questions such as "how are your finances now?" and "how do you think the economy, income, and employment will be six months from now?"

Because consumption makes up a large share of the economy, when consumers are optimistic they open their wallets and when pessimistic they close them, which can affect the actual economy. So "sentiment" is often treated as a leading hint about the economy.

That said, sentiment indicators swing sensitively to factors like news headlines, oil prices, and stock prices, so they carry a lot of noise.

In the U.S. there are two widely used consumer sentiment indicators.

The Conference Board Consumer Confidence Index (CCI) sets 1985 at 100 and surveys about 3,000 households on current and six-months-ahead conditions with five questions. It is relatively sensitive to perceptions of employment and the labor market.

The University of Michigan Consumer Sentiment Index sets the first quarter of 1966 at 100 and asks about 600 households roughly 50 questions. It tends to be more sensitive to personal finances and inflation expectations.

Because the two indices differ in base period and survey method, they can point in different directions in the same month. So it is important to check which index it is and what the threshold is.

In Korea, the Bank of Korea publishes the Composite Consumer Sentiment Index (CCSI) monthly. It is composed by synthesizing six major individual indices, and the threshold of 100 is the long-run average from January 2003 to December 2025.

So a reading above 100 means consumers are "more optimistic than the long-run average," and below 100 means "more pessimistic than the long-run average." For example, Korea's CCSI in June 2026 was 106.6, a somewhat more optimistic level than the long-run average.

The key here is that "100" is not an absolute boundary between good and bad but a relative benchmark of "versus the past average."

The consumer sentiment index is useful for reading the mood of the economy, but it is unsuitable as a trade-timing tool.

First, sentiment is highly volatile. It often swings sharply within a single month with oil price spikes, political issues, or stock price moves.

Second, sentiment and actual consumption or stock prices do not always move together. Even when people answer that they are "pessimistic," their actual spending often holds up.

Third, a sentiment indicator is likewise just one of many indicators. Instead of buying and selling in reaction to a single month's figure, it is safer to look at the trend over several months together with other indicators. If you are a long-term, recurring-investment investor, you especially have little need to align your trades with the ups and downs of such indicators.