Countries measure the mood of their consumers by surveying consumer attitudes regarding present economic conditions each month. Consumer spending usually makes up two-thirds of GDP in a developed economy, and therefore is important to monitor. Consumer confidence also affects stock and bond markets, and can give insight into consumers reactions to any economic shocks. The general method in scoring the confidence level is through household surveys conducted monthly. Some use preliminary estimates which surveys fewer households at the beginning of the month, and a final survey that encompasses a larger sample pool towards the end of the month.
The European recession continues to pick up steam an end of the month report from the European Commission showed. Economic sentiment among consumers, and the industrial and services sectors all deteriorated. Consumer confidence fell to the lowest on record and unemployment rose to a two-year high. With companies cutting back their labor force in response to weak global and domestic demand, households are becoming more and more worried about their economic condition and future. With the economic situation getting significantly worse, the ECB will have to move to lower borrowing costs in an attempt to open up frozen credit markets. The US has already moved to a zero interest rate policy and the ECB was hoping to maintain rates at somewhere near their current rate. Those plans seem to be going out the window and is was reflected in the forex markets by a sharp drop in the value of the Euro to start the week.
