Consumer confidence

Consumer confidence is a survey based measure of how optimistic or pessimistic consumers feel about the economy and their own financial situation. It is published regularly, most notably by the Conference Board in the United States, based on surveys asking people how they view current business and job conditions and how they expect things to look in the months ahead.

The reason investors watch consumer confidence is that it tends to lead actual spending. A consumer who feels uneasy about their job or the broader economy tends to pull back on discretionary purchases, the nonessential spending that is easiest to cut, before that pullback shows up in a company's own reported sales. A falling reading across the economy as a whole is a signal that discretionary spending broadly may soften, not a forecast for any one company specifically.

Consumer confidence is a macro indicator, not a company specific one, so it matters most for judging the environment a company is operating in rather than the company's own execution. A business already dealing with problems of its own has less room to absorb a weak consumer environment than one that is otherwise healthy, which is why the two are usually weighed together rather than in isolation.