4 economic stats that matter -- to you

Want to dicker over big-ticket items?

When to look for it: Consumer confidence is measured monthly and reported at 10 a.m. ET on the last Tuesday of the month, reflecting the data for the current month.

What it means: Formally known as the Consumer Confidence Index, consumer confidence is measured by The Conference Board, an independent economic research organization, and based on a survey of 5,000 households.

"Consumer confidence measures the degree of optimism on the state of the economy consumers are expressing via their spending and savings activities," says Vinnie Aggarwal, the chief economist at Frost & Sullivan and the director of the Berkeley Asia Pacific Economic Cooperation Study Center at the University of California, Berkeley. The index indicates consumer attitudes about the current climate and their expectations about the future.

Several factors drive the index up or down. When everyone was spending freely a few years ago, consumer confidence soared, even if the buyers were spending money they didn't have. "People felt secure in their jobs and in their retirement strategies. And their spending reflected such," Aggarwal says.

However, the index's current sharp downhill slide (and current all-time low) represents our mounting fears about losing our homes and jobs. Aggarwal says fear has consumers spending considerably less on dinners out, new appliances and vacations than in years past. "That mix of fear and subsequent reduction in spending conspires to undermine consumer confidence. And creates a gloomy near-term outlook," Aggarwal says.

Stability is key. A number around 75 or 80 indicates we're spending just enough to keep the economy going at a current pace but that it probably won't grow very much.

Changes of less than 5%, Aggarwal says, are usually dismissed as "noise." "As such, retailers, manufacturers and banks usually do not adjust pricing," he adds. A move of 5% or more indicates a change in the economy, prompting businesses to shift pricing.

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How it affects you: There are plenty of bargains to be had now because a prolonged low in consumer confidence has retailers lowering prices to attract buyers, Aggarwal says. "Those lower prices and subsequent spending will drive up consumer confidence."

What you should do: When you see a decline of 5% or greater, haggle. Aggarwal says that if you can afford to buy the new appliance or sneakers you've been eyeing, do so -- "just don't pay the sticker price." Most retailers are hungry for sales and will knock as much as 15% off the price if you ask.

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When to look for it: daily. The New York Mercantile Exchange provides a daily update.

What it means: Ralph Glass, the vice president of operations at AJM Petroleum Consultants, says Brent crude futures are an international benchmark that set the price for exports of European, African and Middle Eastern oil. "It's the price of a barrel of Brent crude oil, which gives a sense of where energy costs will go based on the source product," he says.

Many factors can play a role in the price of a barrel, including geopolitical issues, weather and natural disasters, trade agreements and wars.

Gasoline and jet fuel are the main products produced from Brent crude, but other refined crude oil products include lubrication oil, paraffin wax, asphalt, industrial fuel oil, heating oil, diesel and kerosene. So you could see those prices fluctuating based on BCF data, too.

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How it affects you: Increases in oil prices have preceded every recession since the early 1970s. In the early 1990s recession, oil prices nearly doubled, jumping from $18 a barrel to about $36. Such increases drain some consumer spending (because of higher prices at the pump and for utilities), which can result in an overall slowdown in the economy.

And Glass says because oil is purchased in advance, the price you're paying at the pump isn't for the actual gallon your tank is guzzling. "Depending on the point of the month that a barrel is bought, it could be purchased up to six weeks in advance of when it will be delivered." That means the price you pay today is actually for gas that won't show up at your local station for four to six weeks.

What you should do: It's simple. Keep your eye on the price. To determine just how much you'll feel BCF at the pump in four to six weeks, take the price of a barrel of oil and divide by 25. You'll get very close to the retail price of a gallon of gasoline.

Published April 7, 2009

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