What does consumer confidence indicate?

Consumer confidence is a crucial economic indicator that reflects how optimistic consumers are about their economic prospects. When consumer confidence is high, it suggests that individuals are likely to spend more, anticipating stable or improving economic conditions. This increased spending can lead to greater demand for goods and services, which can stimulate economic growth.

Conversely, if consumer confidence is low, individuals may be more hesitant to make purchases, which can slow down economic activity. Thus, consumer confidence serves as a barometer for economic sentiment and can influence various aspects of economic performance, including consumer spending, saving behavior, and investment decisions. This makes it an essential tool for economists and policymakers when assessing the economic climate and making decisions that affect economic growth and stability.