Index Divisor

Some economic result numbers are given as totals. Example: U.S. GDP equals $19.4 trillion.

Other econ indicators take the form of indexes. These track changes over time, but don't measure a specific number. Example: the U.S. Consumer Sentiment Index hits 97.2 for May.

That number of 97.2 doesn't mean anything on its own. There aren't 97.2 of anything out in the real world. Instead, the figure exists as a way to compare consumer sentiment in May with consumer sentiment of any other month.

If consumer sentiment rises to 98.5 in June, it gives you an idea of the direction and the magnitude of the change...it rose 1.3 in a month.

But the index has to have a starting point. That initial benchmark is the "index divisor." For the Consumer Confidence Index, that divisor was a value of 100 in December 1966. The number is typically an arbitrary round number (like 100) that becomes the comparison point going forward.