What it is
Consumer confidence reflects the general sentiment of households regarding current and future economic conditions, including job prospects, income expectations, and overall business environment. High confidence suggests consumers are optimistic, leading them to spend more and save less. Low confidence indicates pessimism, often resulting in reduced spending and increased saving, which can slow economic growth. It's a key indicator of future consumer behavior.
Economic reports, such as the Conference Board Consumer Confidence Index and the University of Michigan Consumer Sentiment Index, are widely followed. These surveys poll thousands of households about their perceptions. The Federal Reserve and other policymakers monitor these indices to gauge potential shifts in consumer spending, which accounts for a significant portion of economic activity. A sharp drop can signal an impending economic slowdown.
Why it matters
Consumer confidence directly impacts overall economic activity, as consumer spending drives a large part of the economy. It helps predict future retail sales and economic health.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice