High consumer confidence bodes well for the world economy

Consumer confidence has risen in recent months in much of the developed world. This bodes well for household spending and global growth prospects. Consumer confidence indices are usually composites of a variety of sub-indices derived from responses to monthly surveys. These include questions about households’ perceptions of current, past and future business and employment conditions, as well as the state of their own personal finances. The level of consumer confidence is now consistent with consumption growth in advanced economies of about 3% in year-on-year terms. Admittedly, this latest surge is largely a US story. But even excluding the US, confidence points to spending continuing to grow at about 2%.