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CCI (Consumer Confidence Index)

This problem involves analyzing several indicators of the macroeconomic conditions in an economy, which includes interest rate, income, CPI, inventory levels, wage, consumer confidence and unemployment. These indicators need to be analyzed and a report needs to be prepared to explain the short impact on firms in the grocery and automobile industry in terms of product sales and operating costs. The following information is to be used:

Interest rate: 1.5%
Income: $50,325
CPI: 3.2
Inventory levels: Average
Wage: $24.00
Consumer Confidence: 60.8
Unemployment: 7.9%

Solution Preview

The grocery and automobile industries are strongly tied to the overall condition of the economy.
Given these facts, I would look first at the CCI (Consumer Confidence Index). That doesn't necessarily mean it is the most important factor, but it's the only macroeconomic indicator that gives you a sense of where the economy is moving, and at 60.8 it doesn't look good. A low CCI means that consumers aren't hopeful about the current or future business conditions, employment conditions, or income. This means that people will probably cut back or have already cut back on all spending, hurting the grocery and auto industries.
Interest rate is a lagging indicator. This means that because the rate is low, at 1.5%, the government has implemented expansionary monetary policy to spur growth and investment spending. ...

Solution Summary

CCI (Consumer Confidence Index) is analyzed.