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.
These advantages notwithstanding, we are, of course, continually attempting to evaluate those numbers in the context of the entire range of other indicators for the household sector. A somewhat puzzling feature of the recent period has been that, despite the sharp weakening in sentiment, household spending appears thus far to have held up well.