Confidence indicators are everywhere, from politics to investing.

Some of the more popular investments-related confidence indicators include: CEO confidence, small business confidence, and consumer confidence. Shown below is an example, the monthly confidence measure from the National Federation of Small Businesses:

U.S. Small Business Confidence Indicator

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U.S. Small Business Confidence Indicator

In general, I find confidence measures to not contain much new information. If the stock market and the economy are doing well, I can almost guarantee that all investment confidence measures will be increasing.

There is, however, one exception…one confidence measure that I track closely. I use a homemade or proprietary confidence calculation. It works like this: when the consumer conference board is interviewing people/consumers, they are asked as a series of questions. I focus on the outputs from those assessment questionnaires that are related to current circumstances and expectations of future circumstances (usually six months in the future). The chart below shows, what I think is, the most meaningful confidence measure:

MODIFIED U.S. CONSUMER CONFIDENCE INDICATOR

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MODIFIED U.S. CONSUMER CONFIDENCE INDICATOR

What does the above chart tell me? As the saying goes, when “soccer-moms/dads” are concerned about the future, you should listen.