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How Consumer Confidence Relates to Inflation

Why shoppers’ moods can drive spending—and feed price increases.

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Consumer confidence in the economy has taken a nosedive as prices climb higher due to rising inflation, potentially indicating that the U.S. is on the road to a recession. This video looks at how the government collects data on consumer confidence while also examining the ways that low economic expectations can further fuel inflation.

Questions:

  1. Why does the government collect data on consumer confidence? What sort of questions do they ask participants?
  2. How can declining consumer confidence potentially drive inflation even higher?
Author: NickelsMcHughMcHugh