Why Consumer Confidence Is Key to Fighting Inflation | WSJ

Why Consumer Confidence Is Key to Fighting Inflation | WSJ

Why Consumer Confidence Is Key to Fighting Inflation | WSJ

Consumer confidence, sentiment, expectations… Whatever you call it, the measurement of how consumers are feeling about the economy is being closely watched by the Federal Reserve.

Why? Because consumer confidence can be a self-fulfilling prophecy: If enough people think inflation is going to get worse, it likely will get worse.

WSJ looks at how the two main measurements — the consumer-sentiment index and the consumer-confidence index — are calculated, and why Federal Reserve Chairman Jerome Powell has to not only bring down inflation, he has to make the public confident that he will.

Read more about why the Federal Reserve is trying to keep public confidence high on The Wall Street Journal:

Illustration: Adele Morgan

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