Usually, consumer sentiment closely mirrors contemporaneous economic conditions, and it generally moves closely with the growth in household spending. Not surprisingly, the key influences on household spending, such as the growth of personal incomes and the buoyancy of financial markets, also appear to bear importantly on consumer sentiment.
Relative to other indicators for the household sector, the indexes of consumer sentiment are available on a very timely basis and so can provide an early reading on the direction of household spending. Moreover, while it is a contemporaneous indicator of household spending, sentiment also seems to have some limited predictive ability for future household spending.