What the Heck is Consumer Confidence and Why Should I Care?

Consumer Confidence is a survey of consumer attitudes concerning both the present situation as well as expectations regarding economic conditions conducted by The Conference Board. Five thousand consumers across the country are surveyed each month. The level of consumer confidence is directly related to the strength of consumer spending.

Consumer confidence and consumer sentiment are two ways of talking about consumer attitudes. Among economic reports, consumer sentiment refers to the Michigan survey while consumer confidence refers to The Conference Board's survey.

Consumer spending accounts for two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future.

The more confident consumers are about the economy and their own personal finances, the more likely they are to spend.

With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just remember that changes in consumer confidence and retail sales don't move in tandem month by month.